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

  • For self, spouse, or children

  • For the purpose of pursuing higher education

  • From a bank or an approved charitable institution

Education Loan Income Tax
Education Loan Income Tax

Income Tax deduction on Education Loan can be claimed for

  • 8 years or

  • until interest on loan is fully repaid whichever is earlier

Now, let’s use the income tax calculator to see how much tax you can save with education loan.

Step 1: Open the Income Tax Calculator

Step 2: Key in your salary details

Income tax - Earnings
Salary Deductions

Step 3: Now, calculate Income Tax

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

Declare Education Loan Save Income Tax

Step 5: Calculate Income Tax again

Compute Income Tax Education Loan

As you see, the total tax liability has come down by INR 23438

Try the Free Online Income Tax Calculator!
No credit card! No signup! It’s Free!

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.