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Tax Planning through savings and investments

Interest on education loan

The interest paid on an education loan is tax-deductible under section 80E. This deduction is only available to the person paying the education loan. If the loan is being repaid by the parent, then the tax deduction will be available to him/her. In case the loan is being repaid by the child, then he/she can claim the deduction.

 

This deduction is available for a maximum period of 8-years or till the interest is paid, whichever is earlier. Usually, education loans have a moratorium period as in the loan is first provided for higher education and repaid only when the candidate starts a job or the elapse of a certain period (usually 6 months) after the course completion. The deduction is applicable only when the loan repayment starts. 

 

Please note: Only the interest amount of the education loan EMI is tax-deductible under section 80E. The principal amount is not tax-deductible.

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Units 12/15