Interest on loan for higher education is eligible for Deduction under Section 80E
The amount in respect of interest paid on loan borrowed from any financial institution or any approved charitable institution is eligible for deduction under Sec. 80E of the Income Tax Act, 1961, the loan being taken for the purpose of higher education. There is no limit on the interest amount eligible for deduction.
Deduction is allowed for initial year, i.e. when the individual starts making interest payment and immediately succeeding 7 years or until the interest is paid fully, whichever is earlier. Deduction is available only to Individual not to HUF or other type of Assesses. The loan includes not only tuition or college fees but also other incidental expenses for pursuing such studies like hostel charges, transport charges etc.
This is one of the tax saving measures for people who have grown up kids and need funds for the educational expanses of their children.
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