Deduction for education loan

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Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2011 Experts,

I have question for education loan deduction u/s 80E.

Take an eg. My brother in law want to go to US for higher studies. My in laws family members don't want to be co borrower for his education loan due to some upcoming investment plans. So i have become his co borrower in his education loan. Now my question is Can I claim the deduction of education loan in my income tax returns? If no then whats the logic & if yes then under what provisions/explanations.

Please reply fast.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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29 December 2011 Deduction u/s 80E is available for interest on loan taken for pursuing own higher education or for higher education of RELATIVE.

Relative for the purpose of Section 80E means spouse and children of that individual or the student for whom the individual is the legal guardian.

Since brother-in-law is NOT covered in the definition of RELATIVE, you cannot claim deduction of loan taken for his higher studies.

Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2011 thanks. Can please elaborate the meaning of legal guardian, please.

Also tell me how i can become legal guardian or temporary legal guardian of major person.

Is executing temporary legal guardianship agreement under a seal of notary is enough to claim this.

Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2011 please reply soon.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2024 In the context of claiming deduction under Section 80E of the Income Tax Act for an education loan, here’s how it works and the relevance of legal guardianship:

### Claiming Deduction under Section 80E:

1. **Who can claim the deduction**: The deduction under Section 80E is available to an individual who has taken an education loan for higher studies of self, spouse, children, or for a student of whom the individual is the legal guardian.

2. **Legal Guardian Definition**:
- A legal guardian is someone who has been legally appointed to care for the personal and/or financial interests of another individual, typically a minor or an incapacitated person.
- In the context of education loans, the term "legal guardian" can apply to a major person (over 18 years) if specifically recognized as such under applicable laws or through a legal agreement.

3. **Becoming a Legal Guardian**:
- **Appointment**: To become a legal guardian, you typically need to be appointed by a court or through a legal process recognized by local laws.
- **Agreement**: While a notarized agreement can provide evidence of intention and consent, it may not confer legal guardianship in all jurisdictions.
- **Temporary Legal Guardianship**: This may be possible through a specific legal process outlined by local laws. However, such arrangements should be legally recognized and enforceable.

### Education Loan Deduction for Co-borrowers:

- **Claiming Deduction**: Generally, only the individual who is the borrower of the education loan (the student) can claim the deduction under Section 80E for the interest paid on the loan.
- **Co-borrower’s Perspective**: As a co-borrower of the education loan, while you are jointly liable for repayment, you cannot claim the deduction under Section 80E unless you are also the legal guardian of the student.

### Conclusion:

- **Legal Guardian Status**: To claim the deduction under Section 80E for an education loan taken by your brother-in-law, you would need to establish legal guardianship status as recognized under applicable laws.
- **Documentation**: A notarized agreement alone may not suffice unless it establishes legal guardianship as per the relevant legal framework.
- **Consultation**: It’s advisable to consult with a legal advisor or tax consultant who can provide guidance specific to your jurisdiction and the legal requirements for claiming deductions related to education loans.

Ensure to review the specific provisions of the Income Tax Act applicable in your country and seek professional advice to ensure compliance with all legal and tax regulations.

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