The deadline to file Income Tax Return for the Financial Year 2017-18 is 31st July 2018 and many of you must be wondering how to reduce your tax liability. We will tell you how you can reduce your tax liability by claiming deduction under Section 80E.
Tax benefits for Educational Loan or Foreign Education, can be claimed under Section 80E, this is what all you need to know about it: –
Who is eligible to claim tax deduction under Section 80E?
Only an individual taxpayer can claim this deduction, it is not available for HUFs or any other kind of taxpayer. A taxpayer can claim tax deduction under Section 80E, only when the education loan is taken for the higher education of self, spouse, children or someone for who the taxpayer is a legal guardian.
From which Financial Institutions the taxpayer should take the loan?
The loan should be taken from any Bank/ financial institution or any approved charitable institutions. Loans taken from friends or relatives don’t qualify for the deduction under section 80E.
What is the deduction amount, that can be claimed under Section 80E?
The deduction amount that you can claim is the total EMI paid by you during the Financial Year. There is no limit on the maximum amount that is allowed as deduction. You need to obtain a certificate from your Bank, if you wish to claim deduction under Section 80E. Such certificate should segregate the principal and interest portion of the education loan paid by you during the financial year. The total interest paid will be allowed as deduction. No Tax benefit is allowed for the principal repayment of the loan.
Till when can I get this deduction?
The tax deduction for the interest on Educational loan starts from the year in which you start repaying the loan. It is available only for 8 years starting from the year in which you start repaying the loan or until the interest is fully repaid whichever is finishes earlier.