Applicable to: Individual taxpayers
This section provides a deduction for interest paid on loans taken for higher education, easing the financial burden on students/parents.
Key Features (AY 2025-26)
1. Eligible Loans
- Higher educationin India or abroad for:
- Self
- Spouse
- Children
- Legal guardian (for student)
- Courses:Graduation, Post-graduation, Vocational, Professional (Engineering/Medical/MBA etc.)
2. Deduction Amount
- 100% of interest paid(no upper limit)
- No deduction for principal repayment
3. Tenure of Deduction
- Starts from year interest repayment begins
- Allowed for 8 yearsor until interest is fully paid (whichever is earlier)
4. Qualifying Conditions
✅ Loan must be from:
-
- Banks(HDFC, SBI, etc.)
- Financial institutions(NBFCs approved by RBI/Government)
❌ Loans from friends/relatives NOT eligible
How to Claim?
- Form 16E(if available from lender)
- Loan interest certificate(mandatory)
- Keep EMI payment proofs(bank statements)
Example Scenarios
| CASE | LOAN INTEREST (ANNUAL) | DEDUCTION |
| Year 1-3 | ₹50,000 | ₹50,000 |
| Year 4-8 | ₹30,000 | ₹30,000 |
| Year 9+ | ₹20,000 | Not allowed |
Comparison with Other Education Benefits
| SECTION | COVERAGE | MAX DEDUCTION |
| 80E | Education loan interest | No limit (8 years) |
| 80C | Tuition fees (2 children) | ₹1.5L (shared) |
| 10(14) | Scholarship | Tax-free |
Pro Tips
- Prepay interestto maximize deductions in early years.
- Opt for moratorium period(study + 1 year) to defer repayments.
- Combine with 80C(tuition fees) for additional savings.
FAQs
Q: Can I claim deduction during the moratorium period?
A: Yes, once interest repayment starts.
Q: Is a foreign education loan eligible?
A: Yes, if taken from approved Indian banks/NBFCs.
Q: Can I claim both 80E and 80C for education?
A: Yes (80E for loan interest + 80C for tuition fees).
Section 80E is a long-term interest saver for students/parents. With no upper limit, it’s especially useful for high-cost professional courses.
