How to elevate education loan savings through Section 80E? MintGenie explains

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all-time high at 268,923 in 2022-23, demonstrating a 35% surge compared to the preceding year. A key element fueling this inclination is the simplified process within the contemporary educational landscape, making the financing of international education more feasible for parents and students through loans. Notably, Section 80E of the Indian Income Tax Act assumes significance in this context.

Section 80E of the Income Tax Act of 1961 offers a tax benefit for interest paid on loans for higher education. This deduction, applicable for eight years from the start of interest repayment, focuses solely on the interest and not the principal. While there's no specified maximum limit, it's vital to understand that the deduction pertains exclusively to the interest component of EMIs, excluding the principal amount.

The education loan deduction is exclusive to individuals seeking to claim deductions on the interest paid for higher education loans, barring Hindu Undivided Families (HUF) and other taxpayer categories. Eligibility requires the loan to be for the higher education expenses of the taxpayer, their spouse, or children. Legal guardians can also claim the deduction for loans supporting the higher education of their wards.

Notably, this provision does not extend to entities beyond individual taxpayers, ensuring a targeted scope for those benefiting from the deduction. To avail of Section 80E exemptions, individuals must fulfil the criteria for claiming the interest component of an education loan as a deduction. This provision applies exclusively to loans obtained from recognized financial institutions, rendering those from friends and family ineligible.