The Tax Deduction You Get For An Education Loan

  Author: Jai Prakash

Education loan is of great help when your own funds fall short when it comes to paying for a course in higher education. While education loans ensure that the doors to a career of your dreams remain open, they also help you with income tax deduction under Section 80E. What are these tax deductions and how does one become eligible for them? Here is a lowdown. 

Eligibility for educational loan tax deduction For the purposes of income tax, any course after the 12^th standard qualifies as higher studies and an educational loan taken for higher studies qualifies for tax deduction under Section 80E. It is important to remember that to be eligible for income tax deduction, the educational loan needs to have been taken from a financial or charitable institution. Loans from family members and relatives don’t qualify for tax deduction under Section 80E.

Unlimited tax deduction The tax deduction you get for your education loan only covers interest repayment and you can get unlimited amount of tax deduction. Of course, the tax deduction amount is likely to be limited by the fact the educational loans are typically available up to the amount of Rs 20 lakh for overseas education and Rs 10 lakh for domestic education.