Definition
Section 80E
Section 80E gives a deduction for the interest paid on an education loan taken for higher studies, with no cap on the interest amount.
Under Section 80E, the entire interest component of an education loan (not the principal) is deductible from taxable income. The loan must be taken from a bank or an approved financial institution for the higher education of yourself, your spouse, your children or a student for whom you are the legal guardian.
The benefit is available for up to eight years starting from the year you begin repaying the interest, or until the interest is fully paid, whichever is earlier. There is no upper limit on the interest you can claim, which makes it valuable for large overseas-study loans.
This deduction applies under the old tax regime. The principal repayment is not deductible under this section.
Related terms
- Section 24(b) Home Loan InterestSection 24(b) lets homeowners deduct the interest paid on a home loan from their income from house property.
- Old vs New Tax RegimeIndia offers two personal income-tax regimes: the old one with various deductions and exemptions, and the new one with lower slab rates but most exemptions removed.
- EMI (Equated Monthly Instalment)An EMI is the fixed monthly payment you make to repay a loan, combining both principal and interest.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.