18 January 2014
If you’ve taken an Education Loan and are repaying the same, you can always claim deduction under Section 80E of the Income Tax Act for the Repayment of Interest on Education Loan. However, this deduction is only available to Individual and not to HUF.
Only an Individual can claim deduction under Section 80E for the Repayment of Interest on Loan provided that the Loan was taken for the Higher Education of Self or Spouse or Children or the Student of whom the Individual is the Legal Guardian. The Salient features of claiming deduction under Section 80E are mentioned below.
1. Amount and the Nature of Deduction
The Deduction allowed under Section 80E of Chapter VI-A is only for the Repayment of Interest on Education Loan and not for the purpose of Repayment of Principal Amount of Loan. At the time of availing the Education Loan, the Banks issue a Statement stating how much amount is to be paid per annum for Principal Repayment and how much amount is to be paid for Interest on Education Loan.
There would be no treatment of Repayment of Principal for the purpose of Income Tax and only the amount repaid as Interest on Education Loan is allowed to be claimed as a deduction while filing the Income Tax Return.
This deduction under Section 80E is over and above the Rs. 1,00,000 deduction allowed under Section 80C and there is no maximum limit for claiming this deduction under Section 80E
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