Section 80E of the Income Tax allows deduction from taxable income in respect of interest on loan taken for higher education. Let’s find out how you can save tax with your Education Loan.
As per section 80E, the interest on education loan can be claimed as a deduction with no upper limit.
The Education Loan should be taken
Income Tax deduction on Education Loan can be claimed for
Now, let’s use the income tax calculator to see how much tax you can save with education loan.
Step 2: Key in your salary details
Step 3: Now, calculate Income Tax
As per the calculation, you have a total tax liability of INR 124301 in the old regime
Step 4: Declare your Education Loan
Key in the interest amount
Step 5: Calculate Income Tax again
As you see, the total tax liability has come down by INR 23438
You can claim deduction only on the interest portion of the education loan, and the principal part of the education loan is not considered. When you claim deduction on Income Tax under Section 80E, you need to get a certificate from your bank on the interest you paid for the financial year.
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