Is Deduction Under Section 80E is allowed if loan has taken from a financial institution outside India?
9 Replies
Mihir
(Wealth Manager)
(5293 Points)
Replied 06 September 2011
I think it will not be allowed. The financial institution or bank in a foreign country will not be under Banking Regulation Act 1949.
But let others also reply.
pahuja
(C.A Final Student )
(472 Points)
Replied 06 September 2011
Hi Sakshi
As per section 80E of the Income-tax Act, deduction is allowed on interest paid by an individual on loan taken by him from any financial institution or any approved charitable institution to pursue higher education or for the higher education of his spouse and children for a period of eight assessment years, starting with the year in which the individual starts paying the interest.
As per the provisions of the section, a financial institution means a banking institution to which the Banking Regulations Act, 1949 applies or one specified in this regard by the Central government, by notification in the Official Gazette. In other words, education loan should be taken from a bank in India (including Indian branches of foreign banks). Loans from notified financial institutions and approved charitable institution are also eligible for section 80E deduction. No deduction would be available if the loan is taken from a bank outside India.
CONCLUSION: if the bank in the foreign is a branch of an Indian bank, then you would be entitled to claim the deduction of interest for the period as specified above. However, if the loan is taken from a bank/institution that is not notified for this purpose then you can’t claim tax benefit.
I think aforesaid matter may help you to solve out your query.
Thanks and Regards
Suraj Phauja
tirthesh shah
(student)
(125 Points)
Replied 06 September 2011
will the assessee be entitled to deduction in case,
if the assessee has availed loan from the foreign branch of the bank which is domiciled outside but having a certain banking operations in india?
reply.
D VARA PRASADA RAO
(Student (Articles Completed))
(173 Points)
Replied 06 September 2011
Agreed with the above
Satish kumar
(CA-Final Student)
(29 Points)
Replied 13 September 2011
ya i agree with suraj phauja..
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