Deduction For Educational Loan Is Allowed To Person Who Studies!
March 2, 2007 by taxworry · 2 Comments
I have taken an Education loan for Rs 8 Lakhs for my daughter’s higher education in U.K. Any deduction allowed in my loan repayment ? and how much ?mailto:dbaruah@gmail.com
Sorry, if you have taken the loan of for your daughter , neither you nor your daughter can get any deduction u/s 80E because the deduction u/s 80E is allowed to only that person who takes loan for his studies and not for others. Section 80E is given as under
Sorry, if you have taken the loan of for your daughter , neither you nor your daughter can get any deduction u/s 80E because the deduction u/s 80E is allowed to only that person who takes loan for his studies and not for others. Section 80E is given as under
- “80E. (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.”
Budget 2007 update [thanks Sanjeev!]
It has been proposed that the educational loan taken for the relatives which is defined as Wife and Children shall also be allowed as deduction. The notes on Clause of proposed Finance Bill is as follows for the period from which such an amendment will be effective
“The proposed amendment seeks to extend the deduction available under the said section to an individual for the payment made by way of interest on loan taken by him for higher education of his relative.Consequently, it is proposed to define the term “relative” for the purposes of the said section so as to mean spouse and children.This amendment will take effect from the 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years.”
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What about instalments paid after 01.04.2007 in respect of education loan already taken for daughter’s education? FA 2007 has permitted deduction u/s 80E in respect of education loan taken for wife and children also.
Will the interest payment in respect of a pre-existing loan be allowed deduction u/s 80E?
Thanks.
I still think that if the repayment starts after 01.04.2007, assessees will be able to claim deduction u/s 80E even if the loan had been sanctioned and utilized before 01.04.2007. Repayment of education loan starts after a moratorium of 2-3 years, to allow the student to complete her education and take up a job.
As such, there will be many cases where people have obtained edu. loans, but the first repayment instalment hadn’t yet become due on or before 01.04.2007. I think such cases ought to be able to take the benefit of Section 80E. Keeping in view the stated objective—sustaining of high-quality human resources in the country and to encourage talented men and women to take up higher education despite the constraints of resources—of bringing about this amendment, it does not seem equitable to deny deduction to someone who took the loan on 31.03.2007 and to allow it to one who took it on 01.04.2007.
Thanks