Section 80E
Section 80E lets you deduct the full interest paid on an education loan for higher studies. There's no cap on the amount. The deduction runs for 8 years from the year you start repaying, or until the loan is closed, whichever is earlier.
What is Section 80E?
Section 80E covers interest on a loan taken for higher education (graduation onwards) for self, spouse, children, or a student for whom you are the legal guardian. The course can be in India or abroad. The loan must be from a recognised financial institution or approved charitable trust, not from a friend or family member. Only interest is deductible. The principal does not qualify. There is no upper limit on the deduction, which makes it especially useful for high-value foreign education loans where annual interest can run into several lakhs. The benefit period is capped at 8 consecutive assessment years starting from the year of first repayment, or until interest is fully paid, whichever comes first. 80E is available only under the old tax regime.
Example
Sameer took a ₹25 lakh loan for an MBA abroad. In FY 2025-26 he pays ₹2,80,000 in interest. The full ₹2,80,000 is deductible under 80E. At a 30% slab, that's ₹84,000 tax saved (plus cess).
How Section 80E is used
Employees declare 80E in Form 12BB and submit the lender's interest certificate as proof. Payroll lowers the monthly TDS once the declaration is verified.
Section 80E FAQs
Is principal repayment of an education loan deductible?
No. Only interest qualifies under 80E. There is no separate deduction for the principal.
Can I claim 80E for my sibling's education loan?
No. The loan must be for self, spouse, children, or a student for whom you are the legal guardian. Siblings are not covered.
Does 80E work in the new tax regime?
No. It is available only under the old regime. If you switch to the new regime, you lose this deduction.