Moved abroad, started earning in pounds, dollars, or dirhams – but still repaying that old education loan from India? You’re not alone. You need to know about Section 80E of the Income Tax Act. Whether the loan was for your MBA in Mumbai, your spouse’s law degree, or your child’s engineering course, the EMIs don’t stop just because your pin code changed.
And here’s the part many NRIs miss:
That interest you’re paying every month? It can actually help you save on your Indian income tax—if you know where to look.
Enter Section 80E of the Income Tax Act.
This little-known but powerful provision allows individuals to claim a deduction on interest paid towards education loans, even if the education was pursued abroad. And yes, it’s still valid even if you now live overseas—as long as your loan is from an eligible Indian lender.
Whether you’re:
- An NRI repaying your own student loan from India
- A parent supporting your child’s international education
- A legal guardian managing repayments on behalf of a student
Section 80E could give you a major tax breather—especially during India’s tax filing season when every deduction counts.
Let’s break it all down and help you make the most of it.
What is Section 80E?
Section 80E provides a deduction from your taxable income for the interest paid on loans taken for higher education. This benefit is available only on the interest component, not the principal.
The goal of this provision is to ease the financial burden of education for individuals who have taken loans from recognized financial institutions or approved charitable trusts in India.
Who is Eligible to Claim 80E Deductions?
As an NRI, you’re eligible to claim this deduction if:
- You are an individual taxpayer. Hindu Undivided Families (HUFs), firms, or companies cannot claim this benefit.
- You’ve taken the education loan for:
- Yourself
- Your spouse
- Your children
- A student for whom you are a legal guardian
- The loan is in your name and from an Indian bank or financial institution registered under the Banking Regulation Act, or an Indian charitable trust approved under Section 10(23C).
- The course is a full-time higher education program, in India or abroad. Vocational and professional courses (like engineering, medicine, management) after Class 12 also qualify.
Note: Loans from friends, relatives, or employers are not eligible. Also, loans from foreign institutions do not qualify under Section 80E.
What Counts as ‘Higher Education’?
The term “higher education” covers:
- Any full-time course pursued after completion of Class 12
- Approved professional, technical, or vocational programs, such as medicine, management, engineering, law, etc.
- Courses pursued at international universities, provided the loan is from an Indian lender
How Much Can You Claim Under Section 80E?
There is no cap on the deduction amount. You can claim 100% of the interest paid on the education loan in a financial year.
However, the deduction is allowed for a maximum of 8 consecutive assessment years, starting from the year in which you begin loan repayment. If the loan is repaid earlier, the benefit ends with the repayment.
Example:
If you start repaying in FY 2022–23, you can claim deductions from AY 2023–24 up to AY 2030–31, or until the loan interest is fully paid—whichever comes first.
Section 80E vs Section 80C: What’s the Difference?
- Section 80E: Covers only interest paid on education loans. No upper limit on the claim.
- Section 80C: Allows deduction for tuition fees paid for children’s education, subject to a combined cap of ₹1.5 lakh for all 80C investments.
And here’s the best part: You can claim both if you meet the conditions under each.
Tax Filing and Documentation Requirements
When filing your ITR in India, you don’t need to attach documents. But for verification or future scrutiny, keep the following:
- Loan sanction letter from the Indian financial institution or charitable trust
- Annual interest certificates clearly showing the interest paid
- Repayment schedules and bank statements as supporting documents
Points NRIs Should Note
- You must be an Indian citizen to claim the benefit—even if you’re residing abroad.
- The loan must be from an Indian lender. Loans from foreign banks or financial institutions don’t qualify.
- If your income in India exceeds the taxable limit, and you’ve paid interest on an eligible education loan, you can claim the deduction under Section 80E, provided you’re filing returns in India.
Penalty for False Deductions
Misreporting or claiming fake deductions can attract penalties of up to 200% of the claimed amount. Always ensure your documents and claims are accurate.
Final Thoughts
With education costs soaring globally, especially for NRIs, every rupee saved matters. Section 80E offers meaningful relief by allowing a full deduction on interest paid towards eligible education loans.
Whether you’re pursuing your dreams or supporting your children’s future, don’t miss out on this tax-saving opportunity—especially during India’s tax filing season.
Need Help with NRI Tax Filing or Investment Planning?
At SBNRI, we have simplified ITR filing for NRIs/OCIs through a smooth digital journey. Be it Basic Filing, Advanced Filing (includes Capital Gain, etc.), or Premium Filing (Foreign Income), we can help you assess the right computation and lower your tax liability.
You can download SBNRI App or connect with NRI Tax Expert team directly via the button below.
FAQs
1. Can NRIs claim tax benefits under Section 80E of the Income Tax Act?
Yes, NRIs can claim deductions under Section 80E for interest paid on education loans, provided the loan is from an approved Indian financial institution or charitable trust.
2. What type of education loan qualifies for the Section 80E deduction?
Only loans taken from Indian banks or recognized charitable institutions for full-time higher education (in India or abroad) are eligible. Loans from friends, relatives, or foreign banks are not covered.
3. Is there a cap on the deduction amount under Section 80E?
No, there’s no upper limit. You can claim the entire interest paid on the education loan in a financial year.
4. Can I claim the deduction if the loan was taken for my child’s education?
Yes. The deduction is available if the loan was taken for the higher education of yourself, your spouse, your children, or a student for whom you are the legal guardian.
5. How long can I claim the deduction under Section 80E?
You can claim it for a maximum of 8 assessment years starting from the year you begin repaying the loan, or until the interest is fully repaid—whichever comes first.
6. Do I need to submit any documents while filing ITR?
No documents are required at the time of filing, but keep loan sanction letters, interest certificates, and repayment proofs handy in case of future scrutiny.
7. Can I claim Section 80E deduction along with Section 80C benefits?
Yes. Section 80E is separate from Section 80C, so you can claim both if eligible—maximizing your overall tax savings.
