The interest amount paid during the financial year is allowable as a deduction from taxable * income.
It is because no deduction is allowed on the principal repayment amount. One needs to obtain a certificate from the bank wherein the principal and interest amounts of the education loan paid during the financial year should be mentioned separately. The loan has to be taken from a bank or financial institution to pursue higher studies. You can claim a deduction of Interest paid on a loan taken for pursuing higher education from taxable * income under Section 80E of the Income Tax Act, 1961 *.Īccording to Section 80E *, the deduction is allowed on the total interest amount of the EMI paid during the financial year. The spending for pursuing education can let you save on income taxes *. With the growth of the Indian economy and rise in income levels, the spending on education has increased too, that accounts for the second-highest share of wallets for middle-class households in the country. Demographically India has the advantage of having one of the largest youth populations, coupled with widespread educational institutes and schools, and hence educational expenses naturally become one of the liabilities one has to account for. The sector has constantly managed to push the importance of pursuing basic and higher education for economic development. The education industry in India is reportedly estimated to reach US$ 144 billion by 2020 1.
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