The Income Tax Act,1961 provides for a deduction for interest paid on Loan taken for educational Loan for Higher Studies under section 80E. Since Higher Studies are very expensive , this section aims to reduce the burden on the taxpayer by providing a deduction from his Taxable Income.
Eligibility:-
Only an individual Taxpayer can claim deduction under this section. This deduction is not available to any other category of Taxpayer i.e. HUF, Partnership firm, Company, etc. An Individual can claim deduction for loan taken for higher education of self, spouse or children or for a student of whom the said individual is a legal guardian.
Utilization of the Loan:-
The loan should be taken for higher studies either in India or overseas. The term “higher education” means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so. Also, The loan should be obtained from any Financial Institution or any approved charitable Institution as defined under the Income Tax Act,1961
Quantum Of Deduction:-
The interest component of the total amount repaid can be taken as deduction. There is no cap on the maximum limit that can be allowed as deduction. However, a certificate must be obtained from the bank segregating the interest and principal Component
Period of Deduction:-The deduction can be availed for 8 years from the initial year in which the loan repayment starts or until the interest is fully repaid whichever is Earlier.
Kartik M Jain & Associates, CA in Pune is a professionally managed firm serving domestic and international clients providing services relating to direct and international taxation, indirect taxation, auditing and assurance and Consultancy. It is amongst the best CA firms in Pune. Our sister Firm, Payal K Jain & Associates, a Company Secretary in Pune provides services in relation to Company Formation in Pune and across India, Corporate Law and Compliance, ROC filings, FEMA, Trademark Registration, etc.
Our Services :- GST consultation, Chartered accountant, Income Tax consultancy, Corporate law, International Taxation, Transfer Pricing, Regulatory & Advisory Services.
