Benefit u/section 80e

Tax planning 492 views 3 replies

SUPRAKASH MITTRA

CA PSU

61 Points Joined October 2012

DEAR SIR ,

I HAVE SENT MY CHILD TO STUDY MBBS IN CHINA. FOR THE PURPOSE I HAD TRIED TO GET AN EDUCATION LOAN FROM SBI/HDFC BANK , BUT THEY REFUSED. I HAD TO APPROACH LIC [LIFE INSURANCE CORPN] FOR A LOAN AGAINST MY POLICY AT AN INTEREST RATE OF 10.5%. THE LOAN WAS GRANTED BY LIC FOR AN AMOUNT OF RS.4.00 LAKH. I AM PAYING REGULARLY THE INTEREST ACCRUED THEREON TO LIC AND NOT THE PRINCIPAL [AS THE SAME CAN BE SETTLED AGAINST THE POLICY MATURITY AMOUNT]

MY QUERY: CAN I CLAIM THE INTEREST PAID BY ME ON THE SAID LOAN AS A RELIEF U/S 80E ? I HAVE KEPT THE LOAN AMOUNT IN SEPARATE A/C AND PAID ALL THE EXPS THEREFROM BY CHQ/NEFT/RTGS i.e. I CAN PROVE THAT THE AMOUNT IS SOLELY USED TO PAY ONLY FOR HIS EDUCATIONAL EXPENSES . PLEASE HELP. REGARDS

Replies (3)

Stranger

5531 Points Joined December 2013

@ suprakash mittra: Absolutely sir, but one thing I would like to point out that the interest should be paid only out of income chargeable to tax & NOT from any exempt income..Besides, it clearly seems that you have satisfied all other conditions of section-80E, hence you are eligible for claiming deduction of interest on loan only, upto maximum of 8 Assesment Years or or until the interest is paid by the you in full, whichever is earlier...

Hope ur doubt is cleared now...

harish sama

Article assistant

81 Points Joined October 2015

Originally posted by : $tRaNgEr
	@ suprakash mittra: Absolutely sir, but one thing I would like to point out that the interest should be paid only out of income chargeable to tax & NOT from any exempt income..Besides, it clearly seems that you have satisfied all other conditions of section-80E, hence you are eligible for claiming deduction of interest on loan only, upto maximum of 8 Assesment Years or or until the interest is paid by the you in full, whichever is earlier...

totally agreed with MR.stranger, furthur there is no clause in the act that the course should be pursued with in the India. The loan should be taken from an FI or from any charitable institution, since LIC is an FI, loan taken from LIC is permissable, the loan should be for higher study, higher study means any course of study taken after Senior secondary education. Obviously MBBS is the course after senior secondary education

SO absolutely you are eligible for claiming exemption under 80E

Z

Tax Consultation (US and India)

2970 Points Joined September 2011

I have modified this reply and have concluded and concured with the above replies that the deduction is admisible.

Although a CA once told me that deduction is allowed only if the course in done in INDIA, because of the wordings used in defining higher education, but after going through memorandum budget to Finance Bill 2009 and the previous position. It appears that the intention of the law was to create human capital formation. Further in my own interpritation , the senior secondary exam needs to be cleared from recognized school/university etc.

Hence, interest deduction is admissible.