Section 80E: Claiming Education Loan Interest Deduction
- Rashmita Choudhary
- Nov 10, 2025
- 10 min read
Section 80E of the Income Tax Act, 1961 allows individuals to claim deductions on the interest paid on education loans used for higher education in India or abroad. This provision benefits those funding their own or their dependents’ education, helping reduce taxable income and ease financial pressure. The deduction applies only to interest payments made to recognized financial institutions or approved charitable trusts and can be claimed for up to eight consecutive years. By enabling tax savings and supporting education financing, Section 80E continues to play a crucial role in 2025 for both students and working professionals.
Table of Contents
What is Section 80E of the Income Tax Act?
Section 80E of the Income Tax Act, 1961 allows individuals to claim a tax deduction on the interest portion of an education loan taken for higher education. This benefit is specifically designed to support taxpayers who finance education for themselves or their family members through loans. The deduction applies only to interest payments and not to the principal amount of the loan. It is available exclusively to individual taxpayers, not Hindu Undivided Families (HUFs), companies, or firms. Loans must be taken from recognized financial institutions or approved charitable trusts, and they can be used for higher education in India or abroad.
Eligibility Criteria for Claiming Section 80E Deduction
To claim the deduction under Section 80E, the taxpayer must meet certain conditions.
The loan must be availed from a bank, financial institution, or an approved charitable trust. Loans from relatives or friends are not eligible.
The loan should be used solely for higher education, which refers to studies pursued after the Senior Secondary (Class 12) level.
The deduction is available for education undertaken in India or abroad.
Only individuals can claim this deduction; it is not available to HUFs or businesses.
The person claiming the deduction should be the one responsible for repaying the loan. This could be the student or the parent/legal guardian who has taken the loan on behalf of the student.
Key Features of the Section 80E Deduction
The deduction is available only for the interest portion of the education loan repayment.
There is no maximum limit on the amount of interest that can be claimed.
The deduction can be claimed for a maximum of eight consecutive assessment years, starting from the year in which loan repayment begins.
If the loan is repaid before eight years, the benefit will end once the repayment is complete.
The loan can be taken for self, spouse, children, or any student for whom the taxpayer is a legal guardian.
Both domestic and international higher education courses qualify, including professional and vocational programs.
Deduction Amount and Tenure under Section 80E
Section 80E does not impose any cap on the deduction amount. The total interest paid during the financial year can be fully deducted from taxable income. However, the benefit is time-bound — it is available for a maximum of eight years, starting from the year the repayment begins or until the interest is fully repaid, whichever is earlier. For example, if the loan repayment starts in FY 2024-25, the deduction can be claimed from FY 2024-25 to FY 2032-33, provided the interest continues during that period. Once the repayment is complete, the deduction stops even if the tenure is shorter than eight years.
How to Claim Education Loan Interest Deduction under Section 80E
To claim the deduction, the taxpayer must follow these steps during ITR filing:
Obtain an interest certificate from the lending institution, showing the total interest paid during the financial year.
Ensure the loan is used only for higher education expenses and not for other personal purposes.
Report the eligible interest amount under “Deductions under Section 80E” in the income tax return form.
Maintain documentation such as the loan agreement, payment receipts, and bank statements for verification.
The deduction can be claimed only once the repayment begins, not during the moratorium period when no EMIs are paid.
Is Section 80E Deduction Allowed in the New Tax Regime?
Under the new tax regime introduced in Section 115BAC, most exemptions and deductions are removed to simplify compliance and reduce documentation. The deduction under Section 80E is not available if the taxpayer opts for the new regime. Those choosing the new structure can benefit from lower tax rates but cannot claim deductions like those under Sections 80C, 80D, or 80E. Therefore, individuals paying significant interest on education loans may find the old tax regime more beneficial, as it allows them to claim the deduction and reduce taxable income effectively.
How Section 80E Works in the Old Tax Regime
Under the old tax regime, taxpayers can continue to claim all eligible deductions, including Section 80E. The total interest paid on the education loan is deducted from the gross total income, lowering the overall tax liability. For instance, if the annual income is ₹10,00,000 and ₹1,00,000 is paid as loan interest, the taxable income becomes ₹9,00,000. The benefit is especially useful for individuals in higher income brackets, as the deduction helps them save tax while fulfilling education loan obligations.
Example: Tax Saving through Section 80E Deduction
Consider a taxpayer who took an education loan of ₹10,00,000 for a postgraduate course abroad. During FY 2024-25, the total EMI paid was ₹1,50,000, of which ₹1,00,000 was interest and ₹50,000 was principal. Under Section 80E, only the interest portion of ₹1,00,000 can be claimed as a deduction. If the taxpayer’s income falls under the 20% tax slab, the deduction results in a direct tax saving of ₹20,000 for that year. The same process continues for up to eight consecutive years, allowing substantial cumulative tax savings during the repayment period.
Documents Required to Claim Deduction under Section 80E
To ensure smooth processing of claims and compliance, the following documents must be kept ready:
Loan sanction letter from a recognized financial institution or charitable trust.
Annual interest certificate specifying the breakup of principal and interest.
Bank statements showing EMI payments.
Proof of course admission or enrollment.
KYC documents of the borrower and co-applicant (if applicable). While uploading these documents during ITR filing is not mandatory, they should be retained for verification if the tax department requests them later.
Latest Updates on Section 80E for FY 2024-25
For FY 2024-25, there have been no major amendments to Section 80E. The deduction remains available for up to eight years without an upper limit on the interest amount. The scope of eligible courses continues to include all recognized higher education programs in India and abroad. Tax platforms such as TaxBuddy have updated their filing systems to automatically categorize education loan deductions, ensuring users don’t miss out on this benefit. This automation reduces manual input errors and simplifies the process for salaried and self-employed taxpayers alike.
Common Mistakes to Avoid While Claiming Education Loan Deduction
Claiming deductions for principal repayment instead of interest.
Failing to obtain or retain the interest certificate from the lender.
Attempting to claim loans taken from friends, relatives, or unregistered institutions.
Forgetting to verify whether the course qualifies as higher education.
Claiming deduction under both the new and old tax regimes simultaneously. Avoiding these mistakes ensures accurate deductions and prevents any notices or disallowances from the Income Tax Department.
Role of TaxBuddy in Simplifying Section 80E Claims
Platforms like TaxBuddy simplify the entire tax filing journey by integrating AI-based systems that automatically detect deductions such as Section 80E from uploaded documents like Form 16 or bank interest certificates. TaxBuddy also provides expert-assisted filing options where professionals verify each deduction claim before submission. This reduces errors and ensures full compliance with the latest income tax regulations. For individuals repaying education loans, TaxBuddy helps ensure every eligible rupee of interest is deducted, maximizing tax savings efficiently.
Conclusion
Section 80E continues to be an essential provision for individuals financing higher education, offering unlimited deductions on interest payments and promoting financial ease. To take full advantage of this benefit, taxpayers must ensure that their loan is from an approved source and maintain proper documentation. Reliable tax platforms like TaxBuddy make it easier to claim this deduction accurately while filing returns. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy offers flexibility for all types of taxpayers by providing both self-filing and expert-assisted plans. Under the self-filing mode, individuals can upload documents such as Form 16, TDS certificates, and bank statements, and the platform’s AI engine auto-populates the necessary fields to minimize manual effort and errors. For taxpayers with more complex returns—such as those involving multiple income sources, capital gains, or foreign assets—the expert-assisted plan is ideal. In this plan, a qualified tax professional reviews and files the return on behalf of the taxpayer, ensuring 100% accuracy and compliance with the latest tax laws.
Q2. Which is the best site to file ITR?
While the official Income Tax Department e-filing portal remains the primary platform for filing income tax returns in India, many taxpayers now prefer using advanced platforms like TaxBuddy. TaxBuddy combines automation and human expertise to simplify the entire process. It offers features such as document-based auto-filling, real-time TDS validation, deduction tracking, and pre-filing error detection. Additionally, its post-filing support and notice assistance make it a reliable option for salaried individuals, freelancers, and business owners who want both accuracy and convenience in their ITR filing experience.
Q3. Where to file an income tax return?
An income tax return can be filed in two primary ways: directly through the Income Tax Department’s official portal (incometax.gov.in) or via trusted tax filing platforms like TaxBuddy. For most individuals, filing through TaxBuddy offers added advantages such as AI-based guidance, automatic deduction identification, and professional review. The platform ensures that taxpayers claim all eligible deductions, such as Section 80E, without missing out on tax benefits. This dual approach—technology combined with expert review—helps avoid filing errors and reduces the risk of receiving tax notices later.
Q4. Who is eligible to claim a deduction under Section 80E?
Eligibility under Section 80E is limited to individuals who have taken an education loan for higher studies for themselves, their spouse, children, or a ward for whom they are the legal guardian. The loan must be obtained from a recognized financial institution or approved charitable trust. The deduction cannot be claimed by HUFs, firms, or companies. Both salaried and self-employed individuals can avail of this deduction, provided they are the ones repaying the education loan. Additionally, the course of study must be beyond the Senior Secondary level (Class 12) and can be pursued either in India or abroad.
Q5. Is the principal amount of an education loan deductible under Section 80E?
No, Section 80E specifically allows deduction only on the interest portion of the education loan repayment, not on the principal amount. While the principal repayment reduces the outstanding balance of the loan, it does not qualify for any tax benefit under this section. The total interest paid during a financial year can be claimed as a deduction, reducing the taxpayer’s taxable income. Taxpayers are advised to obtain an annual interest certificate from their lender to identify the correct amount of interest eligible for deduction.
Q6. Can Section 80E be claimed for foreign education?
Yes, Section 80E allows deductions for education loans taken for pursuing higher studies abroad. This includes recognized courses such as engineering, management, medicine, science, or other professional programs offered by foreign universities. The condition is that the loan must be availed from a recognized bank or financial institution in India or an approved charitable trust. Expenses such as tuition fees, hostel charges, and travel costs covered under the education loan are also eligible for interest deduction, provided they are part of the sanctioned loan amount.
Q7. What is the maximum deduction allowed under Section 80E?
There is no upper cap on the deduction amount under Section 80E. Taxpayers can claim the full amount of interest paid on the education loan during a financial year. However, this benefit can only be availed for a maximum of eight consecutive assessment years, starting from the year the repayment begins, or until the interest is fully repaid—whichever is earlier. This makes Section 80E one of the few tax provisions with an unlimited deduction ceiling, offering substantial savings for individuals repaying large education loans.
Q8. Can both parent and child claim the same loan under Section 80E?
No, only one person can claim the deduction for a single education loan under Section 80E. The individual who is legally responsible for repaying the loan—and whose name appears in the loan agreement—is eligible to claim the deduction. For instance, if the parent has taken the loan for their child’s education and is repaying it, the parent can claim the benefit. However, if the loan is in the child’s name and they are repaying it after securing employment, only the child can claim the deduction. Both cannot claim it simultaneously for the same loan.
Q9. When does the deduction period start for Section 80E?
The deduction period under Section 80E starts from the financial year in which the repayment of the education loan begins. This period continues for the next seven consecutive years, making it a total of eight assessment years. If the taxpayer repays the loan earlier, the deduction ends once the interest payment stops. For example, if repayment begins in FY 2024-25, deductions can be claimed up to FY 2032-33, provided interest continues during that period. Once the interest component ceases, the deduction automatically discontinues.
Q10. Is Section 80E applicable under the new tax regime?
No, the deduction under Section 80E is not available in the new tax regime introduced under Section 115BAC. The new regime focuses on lower tax rates with minimal deductions and exemptions to simplify the filing process. Therefore, taxpayers who wish to claim education loan interest under Section 80E must opt for the old tax regime. For individuals paying substantial interest on education loans, the old regime often results in greater tax savings compared to the new one, despite the higher nominal tax slabs.
Q11. What documents are needed to claim Section 80E?
To claim Section 80E deduction, the taxpayer should keep the following documents ready:
Loan sanction letter from the recognized financial institution or approved charitable trust.
Annual interest certificate specifying the breakup of principal and interest paid.
EMI payment receipts or bank statements confirming loan repayment.
Proof of admission or enrollment in a recognized course.
PAN and KYC documents of the borrower and co-applicant (if applicable). While no attachments are required at the time of ITR filing, these documents must be retained for verification by the Income Tax Department if demanded.
Q12. How can TaxBuddy help with claiming Section 80E deduction?
TaxBuddy simplifies the process of claiming Section 80E deduction through its AI-powered platform. When users upload documents such as Form 16, interest certificates, or loan statements, TaxBuddy’s intelligent system automatically detects eligible deductions like Section 80E and applies them accurately in the ITR. The platform ensures that no eligible tax-saving opportunity is missed and helps users avoid common errors in manual filing. For complex cases involving multiple deductions or foreign education loans, TaxBuddy’s expert-assisted plans ensure professional review and compliance, making the entire filing process stress-free and precise.
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