Interest on Education Loans - Tax benefit

Compulsory conditions for claiming deduction under section 80E of income tax act, 1961 for Interest on Education Loans.

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  1. Only Individuals Can Claim deduction under section 80E and it is not available to HUF or any other person.

  2. The purpose of the loan is required to pursue higher studies in India or outside India.

  3. Higher studies includes both the Vocational courses as well as the regular courses pursued after passing the senior secondary examination or its equivalent exam.

  4. Education loan should be taken from any bank / financial institution or any approved charitable institutions. Loans taken from friends or relatives and loan taken from any financial institution outside India don’t qualify for the deduction under section 80E.

  5. Deduction allowed if loan taken for Higher education of self, spouse or children or the student for whom the individual is a legal guardian upto to the total interest paid during the financial year.

  6. Loan taken for siblings (brother/sister) or other relatives (in-laws, nephew, niece, etc.) would not qualify for section 80E benefit.

  7. No limit on the maximum amount of deduction under section 80E and no tax benefit is allowed for the principal repayment.

  8. Period of Deduction is available from the year in which individual starts paying interest on loan and in 7 succeeding years and it is allowed for maximum period of 8 years or until the interest is repaid in full, whichever is earlier.

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