View Full Version : Education Loan - Treatment in IT 2008-09

12-07-2008, 01:34 PM
Mr.Indranil Chakraborty asked, Is there any change in the tax treatment of education loan repayment, wef AY 2009-10?

28-09-2008, 09:50 AM
Educational loan Under Section 80 E

28-09-2008, 09:54 AM
. Deduction of Educational Loan U/S.80 E

(1) 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 97[or for the purpose of higher education of his relative].

(2) 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.

(3) 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 98[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 Gazette99, specify in this behalf;

(c) Higher education means full-time studies for any graduate or post-graduate course in engineering, medicine, and management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics;

(d) Initial assessment year means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan.]

1[(e) relative, in relation to an individual, means the spouse and children of that individual.]

31-07-2009, 04:28 PM
After implementation of 6cpc.EDUCATION ALLOWANCE OF Rs 1000/child is reimbursed to the govt servant. My query is, for the purpose of calculating gross income whether we should include this amount in the total income of the employee. If yes, whether exemption of RS 100/Child is available under rule 2BB of IT Rules OR whether this full amount will not be included in the total income as education allowance is reimbursed only after employee has incurred expenditure in the form of tution fee on his/her child education. Unlike transportation allowance, education allowance is not paid with the salary every month.In other words govt is not paying any thing extra to the emplyoees in the form of education allowance. Govt is just reiumbersing the expenditure already incurred by the emplyoee.