Section 80E of the Income Tax Act lets you claim a tax deduction on the interest paid on an education loan. It’s meant to support individuals who borrow money to fund higher education, either for themselves or close family.
Think of it as the government giving you a “thank you” for investing in learning.
What Can You Claim Under 80E?
- Only the interest portion of your education loan EMI is eligible.
- There’s no cap (no upper limit) on how much interest you can claim.
- Principal repayment is not eligible under 80E.
Who Can Claim?
You can claim Section 80E if:
- You’ve taken a loan from a bank, financial institution, or approved charitable trust.
- The loan is for higher education of:
- Yourself
- Your spouse
- Your children
- A legal ward (if you’re their guardian)
- You’re the one repaying the loan.
Companies or firms cannot claim this benefit—only individuals.
What Qualifies as Higher Education?
Any course (in India or abroad) after completing 12th grade:
- Engineering, medicine, MBA, MS, etc.
- Full-time or part-time, vocational or academic
- Includes courses from recognized foreign universities too
Deduction Duration
- You can claim it for up to 8 consecutive financial years
- Or until you finish paying the interest—whichever comes first
- The deduction starts from the year you begin repaying the loan
Real-Life Example
Let’s say you took an education loan for your MBA and paid ₹1.8 lakh in interest in a year:
- You can claim ₹1.8 lakh as deduction under Section 80E from your taxable income.
- If your income was ₹10 lakh, your taxable income becomes ₹8.2 lakh, reducing your tax bill.
Quick Summary
| Feature | Details |
|---|---|
| Eligible expense | Interest on education loan |
| Max limit | No upper cap |
| Who can claim | Individual borrower |
| For whose education | Self, spouse, children, ward |
| Loan from | Banks, NBFCs, approved trusts |
| Duration of benefit | Up to 8 years |
| Course eligibility | Higher education (India/abroad) |
Final Takeaway
Section 80E helps you lower your taxes while investing in education. If you’re paying off an education loan, don’t miss this valuable deduction—it’s one of the few without a limit.
