Deduction under section 80E - Income Tax Act

Section 80E of the Income Tax Act - This section offers a tax deduction for the interest paid on education loans. Here are the key points:

Purpose: Section 80E encourages individuals to pursue higher education by providing tax benefits. If you’ve taken an education loan for yourself, your spouse, children, or a student for whom you are the legal guardian, you can claim this deduction.
Eligibility:
Only individuals (not HUF or other taxpayers) can claim this deduction.
The loan must be taken from banks/financial institutions or approved charitable institutions.
It should be for higher studies, whether in India or abroad.
Higher studies include vocational and regular courses pursued after passing the senior secondary examination.
Deduction Amount:
The deduction is available only on the interest part of the EMI, not the principal.
You can claim the deduction for a maximum of eight years, starting from the year in which interest repayment begins.
There is no specific limit on the amount you can claim; it depends on the actual interest paid during the financial year.
Tax Benefit:
The interest component of the education loan can be deducted from your income, similar to deductions under Sections 80C and 80D.
Corporations are not eligible for this deduction; only individuals can claim it.
Remember that this deduction can significantly reduce your tax liability while supporting your educational aspirations!