Section 80E of the Income Tax Act allows a tax deduction on the interest paid on education loans for higher studies. Education in India is becoming increasingly expensive, and many students rely on education loans to pursue higher studies. To ease the financial burden, the Income Tax Act offers relief under Section 80E, which allows a deduction on interest paid on education loans. However, for FY 2024–25, the Income Tax Department has introduced new disclosure requirements that every taxpayer must be aware of before filing their return.
Key Takeaways
| Criteria | Details |
| Deduction Type | Interest on education loan only |
| Maximum Deduction Amount | No upper limit (100% interest paid is allowed) |
| Eligible Period | Maximum of 8 assessment years, or until full interest is paid—whichever is earlier. |
| Applicable To | Individuals (not HUF, firms, companies, etc.) |
| Loan Purpose | Higher education of self, spouse, children, or legal ward |
Conditions on Deduction
Section 80E provides a deduction on the interest component of an education loan.
- Available for individual taxpayers only.
- Deduction allowed only on the interest paid, not the principal.
- The loan must be taken from a financial institution or approved charitable institution.
- Loan Taken for higher education of self, spouse, children, or a student for whom the taxpayer is a legal guardian.
Deduction u/s 80E are not allowed
- Deductions will be not allowed if loan is taken from family member or relatives.
- Education loan taken from any financial institutions outside India would also not be allowed to be claimed as a deduction.
- It is not available for HUF and companies.
Maximum Limit Available u/s 80E
There is no maximum limit for claiming this deduction under section 80E.
Deduction Ends with Loan Repayment
- The Section 80E deduction is available only on the interest paid during the loan repayment period.
- It is available only for 8 years starting from the year in which you begin repaying the loan or until the interest is fully repaid whichever is earlier.
- Once the entire loan (principal + interest) is repaid, you can no longer claim any deduction under Section 80E—even if 8 years have not passed.
For example 1
Case 1 : If you have taken loan and you complete repayment of your loan in 6 years, then tax deduction will be allowed for 6 years not 8 years.
Case 2 : If your loan repayment period is for 10 years, then you can claim the deduction for the first 8 years. The remaining 2 years won’t qualify for the deduction.
For example 2
| Scenario | Repayment Period | Interest Paid | Section 80E Claim |
| Normal Repayment | 8 years | ₹5.5 lakh | Full ₹5.5 lakh Allowed |
| Early Repayment (in 3 yrs) | 3 years | ₹2.1 lakh | Only ₹2.1 lakh allowed |
Documents Required
You need to obtain a certificate from your bank. Such certificate should separates the principal and the interest portion of the education loan paid by you during the financial year.
What is meant by higher studies?
Higher studies means any regular course pursued after clearing the senior secondary exam.
The course must be from a school, board, or university recognized by the Central or State Government, or by an authority authorized by them.
Calculation for Deductions u/s 80E
Let us assume that Ajay’s monthly income is Rs. 65,000 per month.
He has taken a loan for his son which he paid interest during the year is Rs 60,000.
He has also invested in PPF, NSC, LCI during the financial year approx Rs 1,55,000.
So, what will be the taxable income after the deduction under Section 80E?
Solutions
| Particulars | Amount (in Rs.) |
| Gross Total Income | 7,80,000 |
| Deductions under Section 80C | 1,50,000 |
| Net Total Income | 6,30,000 |
| Deductions under Section 80E | 60,000 |
| Taxable Income | 5,70,000 |
What’s New in FY 2024–25?
From Assessment Year 2025–26 (FY 2024–25), the following disclosures are now mandatory:
Lender’s PAN and Details
Taxpayers must disclose
- Name and PAN of the lending institution.
- Address and loan account number.
Interest Certificate Upload
- One must upload an interest certificate issued by the bank or NBFC to validate the claim.
Mode of Payment
- Details of payment methods (NEFT/RTGS/cheque) and transaction IDs should be maintained for record.
Loan Purpose Declaration
- To declare that the loan has been utilized solely for higher education purposes, including tuition, accommodation, books, etc.
e-Verification Requirement
- Claiming 80E now requires mandatory e-verification of supporting documents during ITR filing, especially in pre-filled ITRs.
FAQs
No, only from recognized financial institutions or approved charitable organizations.
No, Section 80E is not part of Section 80C.
1. Section 80C allows claiming deduction for tuition fees paid for education.
2. Section 80E provides a deduction for the interest paid on educational loans taken for higher studies.
You cannot claim the deduction without valid documentary proof.
If you are an NRI paying an Indian bank for an education loan, you may still be eligible if you have Indian income to offset.
To apply for an education loan, a student needs to submit:
1. Completed application form with two passport-sized photos
2. Residential address proof
3. Education certificates (12th mark sheet or UG mark sheet)
4. Admission letter from the university
5. PAN card details and income proof of the parent/guardian
Yes, if it includes interest. But only the interest component is deductible not the principal.
