Exemption to interest on educational loan

As far as deduction of interest charged during moratorium period is concerned, it can be claimed but only when it is paid. during the moratorium period, the bank must have debited your account with interest but its repayment would begin only after the end of period. Hence, when you pay this interest, you can claim exemption under 80E

Further, exemption under 80E can be claimed from the year of first payment till another seven years after that or till interest is fully paid by the assessee, whichever is earlier.

Hence, if another 7 years have not passed since the first payment of interest, then you may claim deduction of the same under this section.

To CA Harsh Lunia,

Sir,

Thanks for your very valuable and useful reply.

The interest debited for the first year and second year of study were paid while availing loan for the subsequent year fees payment. However, from 4th year (2006-07) the interest got accumulated and the repayment by way of EMI got started in 2008.

Now that the total claim including interest charged had been cleared in July, 2012 where the repayment term for EMI is upto July, 2013.

Can I consider the Statement of Accounts of the bank as basic document and can declare to the Management for TDS deduction.

I request for your further guidance.

Thanks.

B.Gopinath