Can I avail tax benefits on education loans for studying abroad?

Students Student Life
1

I am planning to go abroad (specifically US) for my higher studies.

2

Yes, Indian students availing education loans for studying abroad can avail tax benefits under Section 80E of the Income Tax Act. Here’s what you should know:

  1. Deduction Limit: The entire interest paid on the education loan during the repayment period is eligible for tax deduction. However, the principal amount of the loan is not eligible for tax benefits.

  2. Repayment Period: The deduction is available for a maximum of 8 years, starting from the year you start repaying the loan or until the interest is fully repaid, whichever is earlier.

  3. No Upper Limit: Unlike other tax-saving provisions, there is no upper limit on the amount that can be claimed as a deduction. You can claim the actual interest amount paid during the financial year.

  4. Loan Purpose: Tax benefits are applicable only if the loan is taken for higher education for yourself, your spouse, or your children. It does not cover loans taken for siblings or relatives.

  5. Necessary Documents: To claim the deduction, keep all necessary documents, such as loan statements and interest certificates, as evidence of the loan and interest payments made.