Deduction for interest on education loan

Tax planning 408 views 2 replies

Durgesh Keshri

CA Practice

40 Points Joined December 2014

An Education Loan has been taken for his son for Study OUT OF INDIA FOR GRADUATION in the Joint Name of Son and Father. As per the terms of Loan Bank will disburse Loan in next four years as and when a fee is demanded by the institute. For Example the Loan is sanction on 1st April 2014 and First instilment was disbursed by the bank on 02/04/2014 and 2nd installment on 1/10/2014. Similarly bank will disburse balance in future years as and when fee is demanded by the institute. As per terms of Loan the interest is to be paid every month on O/s Balance of Loan. As son has no source of income father has paid the interest for the Period April 2014 till date on monthly basis out of his income. MY QUESTION IS THAT CAN FATHER CLAIM EXEMPTION U/S 80E FOR THE INTEREST PAID DURING THE FY 2014-15 IN HIS RETURN OF INCOME FOR THE AY 2015-16.

Replies (2)

Z

Tax Consultation (US and India)

2970 Points Joined September 2011

Yes

80E. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education [or for the purpose of higher education of his relative]

"relative”, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian