Income Tax efiling in India for FY 2023-24 (AY 2024-25)
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File ITR Now Hire eCA NowSection 80E: What is Section 80E, Eligibility & Documents
What is Section 80E?
Section 80E is a provision of the Indian Income Tax Act that allows individuals claiming of a tax deduction on the interest paid on education loans. This section provides deductions to the individuals who have taken an education loan for higher studies for themselves, their spouse, or their children. However, the deduction is only provided towards the interest components on the said loan by the taxpayer. In simple words, this means that any interest paid by taxpayers towards an educational loan qualifies for deduction under Section 80E. The loan must be taken from an approved charitable or financial institution. The deduction is available for a maximum of 8 years or until the entire interest amount is repaid, whichever is earlier. The deduction can only be claimed by the individual who is repaying the loan and can not be claimed by any other family member. Additionally, the deduction is only available for full-time courses pursued in India or abroad after completing the Senior Secondary Examination or its equivalent. The maximum amount of deduction that can be claimed under Section 80E is the actual interest paid on the education loan during the financial year.
Conditions To Claim Tax Deductions u/s 80E
The following conditions must be met to be eligible for the deduction: The loan must have been taken from a financial institution or an approved charitable institution. The loan must have been taken for full-time courses pursued in India or abroad after completing the Senior Secondary Examination or its equivalent. The courses pursued must lead to a degree or diploma recognized by the University Grants Commission or any other competent authority. The deduction is available only to individuals who are repaying the education loan and cannot be claimed by any other family member. The deduction is available for a maximum of 8 years or until the entire interest amount is repaid, whichever is earlier. The deduction is only available for interest payments and not for the principal amount of the loan. Courses pursued through distance learning or part-time courses are not eligible for the deduction.
Deduction Under Section 80E
There is no deduction limit (under section 80E) prescribed on the education loans as of now and this is the reason why section 80E is crucial for you. Therefore, the principal amount of the loan does not affect the tax benefits or the interest rates levied by the financial institution. Below is a tabular example of how Section 80E calculation for deduction works. Remember that this amount will differ depending on income & other things. Amount Elements Rs.6,00,000 Income of an Individual Rs.1,50,000 Interest repaid under section 80E Rs. 4,50,000 Total Taxable Income In the above example, it is to be noted that the repaid interest on education loan is subtracted under section 80E from the income that provided the dedication up to 1.5 lakhs.
What Are The Required Documents To Claim Deduction u/s 80E?
There are certain essential documents to claim deductions under Section 80E for the interest paid on an education loan. The following are the documents that must be present at the time of availning the deduction under section 80E Proof of Education Loan: You will need to provide the loan agreement with the financial institution that shows the details of the education loan taken, such as the loan amount, repayment schedule, and interest rate. Interest Certificate: You will need to obtain an interest certificate from the financial institution that provides the details of the interest paid on the education loan during the financial year. Receipts or Bank Statements: You will need to keep receipts or bank statements as proof of the interest payments made towards the education loan during the financial year. Certificate from the Educational Institution: You may also be required to provide a certificate from the educational institution that shows the details of the course pursued, the duration of the course, and the fee paid. Note: Keep all these documents safe as they will be required at the time of filing your income tax return to claim the deductions under Section 80E.
Important Points
The deduction amount under Section 80E is only the interest paid towards the education loan availed for higher studies. Only Individuals can avail of the deduction under section 80E excluding HUF (Hindu Undivided Family) for higher studies. You only get the tax benefits on the total amount of the interest paid on the loan ( not on the principal amount). The deduction under section 80E can be claimed from the year in which you start paying interest on the loan for higher education. The deduction under section 80E can be claimed from the year in which you start paying interest on the loan for higher education. Deduction can only be claimed for 8 years (not more than that)
Frequently asked questions
What is section 80E of the income tax act?
Who is eligible to claim deductions under Section 80E?
What is the maximum deduction amount that can be claimed under Section 80E?
How many years can the deduction be claimed under Section 80E?
Can the deduction be claimed by parents for the education loan taken for their children's education?
Can the deduction be claimed for education loans taken for studies abroad?
Krishna Gopal Varshney
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