Benefits of Higher Education Loan U/s. 80E while filing of Income Tax Annual Return.

It is most important to know that the Deductions u/s. 80E on Higher Education Loan as per Income Tax Act in respect of Repayment of Interest on Higher Education Loan, which is taken by the Taxpayee to their children for Higher Education. The conditions of deductions u/s. 80E are as follows:

1. In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relatives(spouse or children). In simple words deduction is available for Repayment of Interest on Loan .No deduction is available for deduction on repayment of principal.Further there is no upper limit under this section.
2. The deduction specified above shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to above is paid in full by the assessee , whichever is earlier.
   

What are the purpose?

• "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority under clause (2C) of section 10, or, an institution referred to in clause (a) of sub-section (2) of Section 80G.
• "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;
• "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;
  
• "initial assessment year" means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan.
• relative", in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.
  

Posted in: Education Loan,U/s. 80 E