Tax · from 1 April 2026
Education Loan Tax Benefit: Section 80E and Section 129
Interest you pay on an education loan, including one for studying abroad, can be deducted from taxable income for up to 8 tax years. From 1 April 2026 the deduction sits in Section 129 of the Income-tax Act, 2025, the successor to Section 80E of the 1961 Act.
- Interest only, no cap
- 8 tax years from first interest payment
- Loans from banks/NBFCs
- Old tax regime
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Quick answer
Education Loan Tax Benefit: Section 80E and Section 129
You can deduct the full interest paid on an education loan from a bank, financial institution or approved charitable institution for your own, your spouse's or your children's higher education, including abroad. The deduction runs for the year repayment of interest starts plus the next 7 years, with no upper limit. Principal is not deductible. Under the Income-tax Act, 2025 it continues as Section 129 (formerly 80E). It is generally available only under the old tax regime.
Official sources: Income Tax Department: Section 129, Income-tax Act 2025
Section 129 (formerly 80E) at a glance
- What is deductible
- Interest only (not principal)
- Upper limit
- No monetary cap on the interest amount
- Period
- Initial year of repayment + 7 following tax years, or until interest is fully paid
- Whose education
- Yourself, spouse, children, or a student for whom you are the legal guardian
- Eligible lenders
- Banks, financial institutions (including NBFCs) and approved charitable institutions
- Courses
- Higher education after Class 12, in India or abroad
- Who can claim
- The individual who took the loan and pays the interest
Example
How much tax you can save
Illustrative, at 30% slab plus 4% cess under the old regime.
How to claim
How to claim the deduction
- 01
Get the interest certificate
Ask your lender for a yearly certificate showing interest paid (separate from principal).
- 02
Choose the old regime
The deduction applies under the old tax regime; compare both regimes for your income.
- 03
Claim in your ITR
Enter the interest under the education-loan interest deduction in your return.
- 04
Keep records
Keep the loan agreement and certificates for 8 years in case of scrutiny.
Who claims
Who claims when parents and student are co-borrowers?
The deduction goes to the person who pays the interest from their taxable income. If a parent pays EMIs while the student is abroad, the parent claims it. Once the student starts working in India and pays, the student can claim it for the remaining years.
If the student works abroad and has no Indian taxable income, the deduction has nothing to offset, so families often plan who pays from which account. Our CA team can help you plan this.
FAQs
Frequently asked questions
Still have a question?
Ask a counsellor directly — we reply on WhatsApp during working hours (Mon–Sat, 9 AM–6 PM IST).
Yes. Higher education in India or abroad qualifies, as long as the loan is from an eligible lender.
Generally no. The new regime removes most deductions, including the education-loan interest deduction. Compare both regimes before choosing.
No. Only loans from banks, financial institutions and approved charitable institutions qualify.
From the tax year in which you start paying interest. It runs for that year and the next 7, or until the interest is fully paid.
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- How Much Education Loan Can I Get to Study Abroad?
- Is a Co-Applicant Mandatory for an Education Loan?
- Education Loan Without a Co-Applicant for Abroad Studies
- Education Loan Interest Rates for Abroad Studies
- Education Loan Moratorium Period Explained
- Margin Money in Education Loans: How Much You Pay
- Education Loan Documents List for Abroad Studies
- Education Loan Process for Abroad Studies
- Education Loan Disbursement Process
- All loan guides
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