Under the provisions of section 80E of the Income Tax Act, 1961, an individual can claim deduction from total income, arrived at for computation of Income Tax thereon, on the amount paid as interest on loan taken by him from any bank or financial institution or any approved charitable institution for the purpose of pursuing his or his relatives’ higher education. For this purpose,

• “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 government.
• “Relative” means spouse and children of the individual or the student for whom the individual is the legal guardian.

Amount of Deduction The individual shall get the deduction of amount paid by the way of interest. The deduction shall be available for the year in which the individual starts paying interest on the loan and the benefit shall be available for interest amount paid for seven years immediately succeeding the initial year. Further, there is no bar on the institution chosen for higher education. So the benefit is available even if the higher education is being pursued at foreign institutions. However the loan shall be eligible for benefit only when it has been taken from an Banking/Financial/charitable Institution recognized or notified by the government of India. We at Taxmantra aim to free you from all tax worries so that you can concentrate fully on your core expertise and optimise your career potential. We at Taxmantra provide full year support solving all your tax issues, in addition to filing of your return of income with excellent tax planning. Please join us now in pursuit of simplifying individual taxation! Alok Patnia Founder and Director at Taxmantra