Amended and updated notes on section 80E of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to deduction in respect of interest on loan taken for higher education.
Chapter VIA (Sections 80A to 80U) of the Income Tax Act 1961 deals with the provisions related to deductions to be made in computing total income. Section 80E of IT Act 1961-2023 provides for deduction in respect of interest on loan taken for higher education.
Recently, we have discussed in detail section 80DDB (deduction in respect of medical treatment, etc.) of IT Act 1961. Today, we learn the provisions of section 80E of Income-tax Act 1961. The amended provision of section 80E is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 80E of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.
Section 80E: Deduction in respect of interest on loan taken for higher education
Section 80E(1) of Income Tax Act
In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative.
Section 80E(2) of Income Tax Act
The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to in sub-section (1) is paid by the assessee in full, whichever is earlier.
Section 80E(3) of Income Tax Act
For the purposes of this section,—
- (a) “approved charitable institution” means an institution specified in, or, as the case may be, an institution established for charitable purposes and approved by the prescribed authority under clause (23C) of section 10 or an institution referred to in clause (a) of sub-section (2) of section 80G;
- (b) “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;
- (c) “higher education” means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so;
- (d) “initial assessment year” means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan;
- (e) “relative”, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.