How to get Tax Deduction for Education Loan | Canara HSBC Life Insurance

Rewrite Under Section 80E of the Income Tax Act, you can claim tax deductions only on the interest paid on your education loan during a financial year. You won’t get tax benefit on the repayment of the principal amount.

For example, if the total EMI of your education loan is Rs. 12,000, and Rs. 8,000 is the principal component and Rs. 4,000 is the interest component, you can only claim Rs. 4,000 per month. So, for the total EMI paid on the loan, you can claim Rs. 48,000 for the financial year as tax deductions.

There is no maximum limit for claiming tax deductions on interest paid for education loans. But you can only claim education loan tax savings or tax deductions for a maximum of 8 years.

Types of education loans eligible for tax deductions:

You can claim tax deductions on education loans as tuition fees paid to any college, university or other educational institution under Section 80E of the Income Tax Act. You can take education loan tax benefits on courses enrolled by you, your spouse and children. Whether you have taken an education loan for a course in India or abroad, you can claim tax deductions on such loans in India. The only condition is that the loan should be taken from a financial institution approved by the RBI.
There are no restrictions for any particular field of study to take an education loan. If your child is pursuing any field of study after completing a senior secondary or equivalent exam, you can claim deductions on interests paid on education loan.

What is the maximum tax deduction allowed for education loans?

As mentioned above there is no maximum limit or ceiling for claiming tax deductions on interest paid on education loan. But taking an education loan has a dual advantage. Apart from the tax deductions on interest paid, parents can claim income tax deductions on tuition fees paid to a school, college, university or any educational institution.

As a parent, you can claim tax benefits of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act on tuition fees paid for your children – up to a maximum of 2 children. If you have more than 2 children, you can claim tax deductions for 2 and let your spouse claim deduction for the remaining. However, to do that, your spouse has to pay the tuition fees for the extra child or children.

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00:34 Tax Deduction under Section 80E
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