Tax Benefits of Education Loan on Higher Studies Under Section 80E 2020-21

There are huge tax benefits of education loan on higher studies under section 80E.

Education loan is a great source of pursuing higher studies of self,spouse,children. Besides it can save you a lot of tax as well.

tax benefits of education loan

tax benefits of education loan under section 80E

If you have taken an education loan,then the interest paid on that education loan is allowed as a deduction from the total income under Section 80E.

You can not take deduction for principal amount of your education loan.

Conditions to take deduction of education loan

  • Only an individual can claim this deduction.
  • It is not available to HUF or any other kind of taxpayer.
  • The loan should be taken for the higher education of self, spouse or children.
  • ¬†legal guardians can take deduction for the adopted child.

From where you should take education loan

  • You can take loan either from a bank,financial institution .
  • Any approved charitable .

Note : loan taken from your friends or relative,is not eligible.

Purpose of education loan

If you want to take deduction of education loan under section 80E, then the purpose of education loan must be to pursue higher education.

It means that,if your child has passed 10+2 and then studying in any technical, vocational or degree, course etc.

The education loan may be taken for study in India or outside India.

Also read :

Take Income Tax Benefit On Tuition Fee FY 2020-21 Under Old Tax Regime

How to Claim deduction

Deduction against education loan is available only to the interest part of the loan amount.

Hence you should take certificate from the bank which classify both principal and interest amount separately.

For how many years you can take deduction

As per income tax law,you can take deduction of interest part of the loan for upto 8 years.

If you have paid loan in 5 years then you can’t take any deduction for coming years.

Kuldeep Singh

is a professional blogger,teacher and income tax expert

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