Section 80E: education loan interest

Section 80E lets you deduct the interest you pay on a loan taken for higher education. There is no upper limit on the amount in TaxCare's rules, but the deduction works only in the old tax regime, and only the interest counts, never the principal you repay.

This is signed off for the tax year 2025-26. For the tax year 2026-27 it is provisional, since the rule set repeats the 2025-26 figures. The Income-tax Act, 2025 renumbers sections: from the tax year 2026-27 this deduction is section 129, with the same conditions.

The main conditions

The conditions are the same under section 80E and the new section 129:

• Only an individual can claim it, and only for interest paid out of income chargeable to tax.
• The loan must be for the higher education of you, your spouse, your children or a student for whom you are the legal guardian. Higher education means any course of study after the Senior Secondary Examination or its equivalent from a recognised school, board or university.
• The deduction starts in the year you start paying interest and runs for that year and the seven years after it, or until the interest is fully paid, whichever is earlier.
• The loan must come from a financial institution (a bank, or another institution the Central Government notifies) or an approved charitable institution. A loan from relatives or friends does not qualify.
• The deduction is for the individual who took the loan and pays the interest.

What the return asks for

For the old regime, TaxCare must hold the following for every education loan you claim, because the ITR schedule has these fields:

• Whether the lender is a bank or an institution, and its name.
• The loan account number.
• The date the loan was sanctioned.
• The loan amount and the amount outstanding.
• The interest paid in the year, which is the amount deducted.

The interest across all rows must add up to the amount you claim. If it does not, the claim is incomplete.

Which part of the EMI counts

Your EMI has an interest part and a principal part. Section 80E allows the interest only. The bank's provisional or final interest certificate for the year separates them. Use the figure for the tax year, 1 April to 31 March, not the calendar year. What counts is the interest you actually paid in the year. Interest that builds up during a moratorium but is not paid that year is not deducted that year.

How the deduction helps

The deduction lowers taxable income, so the saving is the interest multiplied by your tax rate, plus cess. Take a person in the 30% slab who paid ₹60,000 of education loan interest. The saving is ₹18,000, and with 4% cess it is ₹18,720. The same person in the 20% slab saves ₹12,000, or ₹12,480 with cess.

Whether it is worth staying in the old regime depends on all your deductions, not on 80E alone. See old vs new tax regime and worked examples by salary.

80E and other deductions

• 80E is outside the ₹1,50,000 limit of section 80C. It is claimed in addition.
• The principal repaid on an education loan is not covered by 80E, which allows interest only.
• The loan interest on a home loan is a different deduction. See self-occupied vs let-out property.

Common mistakes

• Claiming the whole EMI instead of the interest.
• Claiming the deduction in the new regime, where it is not allowed.
• Using a loan from family or friends, which does not qualify.
• Entering the wrong loan account number or sanction date, which can make the claim fail validation.
• Forgetting to ask the bank for the interest certificate in time.

Documents to keep

• The bank's interest certificate for the tax year.
• The sanction letter and the loan statement.

See proofs you need for each deduction.

How TaxCare helps

When you choose the old regime, TaxCare asks for the loan details above and checks that the interest rows add up to the deduction you claim. It compares your tax under both regimes so you can see whether keeping 80E is worth the old regime. You approve everything before it is submitted. A Tax Expert can check a complicated claim for you.

This guide gives general information and is not professional tax advice.