Tax Benefits of studies abroad: Income Tax Deductions under Section 80E Guide

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Income Tax Deductions under Section 80E

Do you have taken Education loan for your Higher education or you are salaried or your parents providing funding for your education then you can apply for Tax Benefit. Your Education loan is free from Taxes in India and you can claim for Tax benefit on it as per the role of Section 80E of the Income Tax Act, 1961.

  • You can claim for income tax benefit can only interest part of you loan amount. Principal part of the loan is not applicable for the clamming tax benefit.
  • The entire interest amount of the loans amount to be repaid can be deducted while calculating your taxable salary.
  • Any Person can take a benefit of income tax if taking loan for Higher education abroad to pay fees for self, husband, wife, and children or for the students as they are legal guardian.
  • The income tax benefit cannot be applied if education loan taken for siblings or other relatives don’t qualify for Section 80E benefit. So this deduction can be claimed by that person or student only if the loan has been taken loan. Same with Abroad education and Education in India, for both education loans you can avail this Benefit of Tax deduction.
  • You should be very careful that, this loan must have to be any central bank, national bank or approved financial institutions by Indian government. If you are taking loan from your friends or family member or any other relative this Tax deduction scheme is not valid for this kind of loan scheme under Section 80E.

Case study point for eligibility of Education loan Tax Deduction under Section 80E:

Who eligible:

  • Education loan for Higher Education
  • Education loan for full time program
  • Education loan for Indian education or abroad education
  • Education loan taken from authorized Indian financial intuitions, nationalized banks
  • For Courses like graduate or PG course in engineering, medicine Science, management courses or for PG course in applied sciences or pure sciences including statistics and mathematics.
  • University affiliated with government

Who not eligible:

o    Education loan for part time or basic course

o    Education loan taken from friends, family members or brokers

When to claim the Income Tax Deduction for education loan

o    You can claim when your repayment of loan starts

o    You can claim when your payment of interest is done completely

o    You can claim while repayment of loan for the period of time

o    To take benefits on education loan you need inform your company’s HR/accounts, office accounts department so that they can minus TDS from your salary.

o    You can claim for your tax deduction at point of filing income tax returns.

Download This Tax Benefit Guide for Study abroad or Indian Education Loan

Tax Benefits of studies abroad