Section 80E: How to Claim Tax Deduction on Education Loan Interest for AY 2026-27

If you've taken an education loan to fund higher studies — whether in India or abroad — you're entitled to a tax deduction on the interest you pay. Section 80E of the Income Tax Act allows you to deduct the entire interest component of your education loan EMI from your taxable income, with no upper limit on the amount.

Unlike most deductions that come with caps (Section 80C is limited to Rs 1.5 lakh, for instance), Section 80E stands out because there is no ceiling on the deduction. Whether you're paying Rs 50,000 or Rs 5,00,000 in interest per year, the full amount qualifies.

Here's everything you need to know to claim this deduction for AY 2026-27.

Who Can Claim Section 80E?

The deduction under Section 80E is available only to individual taxpayers. HUFs, firms, and companies cannot claim it.

You can claim the deduction if:

• You have taken the loan — it must be in your name
• The loan is for the higher education of yourself, your spouse, your children, or a student for whom you are the legal guardian
• The loan is taken from a financial institution or an approved charitable institution (not from friends, relatives, or your employer)

What counts as a "financial institution"?

Section 80E defines this broadly:

The source of the loan matters. Even if you use a personal loan to pay for a course, it won't qualify under Section 80E because the loan must be specifically designated as an education loan.

What Qualifies as "Higher Education"?

Section 80E covers any course of study pursued after passing the Senior Secondary Examination (Class 12) or its equivalent. This includes:

• Undergraduate degrees (B.Tech, B.Com, BA, BBA, etc.)
• Postgraduate degrees (MBA, M.Tech, MA, M.Sc, etc.)
• Professional courses (CA, CS, MBBS, LLB, etc.)
• Vocational and skill-based courses
• Courses pursued in India or abroad

There is no restriction on the field of study. Whether you're studying engineering at IIT, doing an MBA from a university in the UK, or pursuing a diploma in data science, the interest on your education loan qualifies.

How Much Can You Deduct?

This is where Section 80E gets interesting:

• Only the interest portion of your EMI is deductible — the principal repayment does not qualify
• There is no upper limit on the interest deduction
• The deduction is available for a maximum of 8 assessment years starting from the year in which you begin repaying the loan, or until the interest is fully paid, whichever comes first

Example: How the deduction works

Riya took an education loan of Rs 15,00,000 in 2022 for her MBA. She started repaying the loan in FY 2024-25. In FY 2025-26 (AY 2026-27), her total EMI payments were Rs 2,40,000, of which Rs 1,45,000 was interest and Rs 95,000 was principal.

If Riya's taxable income before this deduction is Rs 8,50,000, her taxable income after claiming 80E drops to Rs 7,05,000 — saving her approximately Rs 15,000 in tax (at the 10% slab under the old regime).

The 8-Year Window Explained

The deduction is available for 8 consecutive assessment years:

• Starting from the assessment year in which you begin repaying the loan
• Ending at the completion of 8 years, or when the interest is fully repaid, whichever is earlier

If Riya started repaying in FY 2024-25 (AY 2025-26), her 8-year window runs from AY 2025-26 to AY 2032-33. After that, even if she's still paying interest, she can no longer claim the deduction.

This makes it advantageous to start repaying the loan as soon as possible after your course ends — the moratorium period (where you aren't repaying) doesn't count toward the 8 years, but any interest that accrues during the moratorium gets added to the loan and increases total interest.

Section 80E Under Old Regime vs New Regime

This is a critical distinction for AY 2026-27:

Section 80E is not available under the new tax regime, which is the default regime from AY 2024-25 onwards. If you want to claim this deduction, you must explicitly opt for the old regime when filing your return.

Before choosing, calculate your total tax liability under both regimes. If your Section 80E interest plus other deductions (80C, 80D, HRA, etc.) bring your old-regime tax below the new-regime tax, the old regime makes more sense. For a detailed comparison, see our guide on old vs new tax regime.

Documents You Need to Claim Section 80E

Keep these documents ready when filing your ITR:

1. Loan sanction letter — proves the loan is specifically for education
2. Interest certificate from the lender — most banks issue this annually; it breaks down how much of your repayment was interest vs principal. This is the most important document.
3. Proof of payment — bank statements showing EMI debits
4. Course enrollment proof — admission letter or fee receipt from the educational institution (keep handy in case of scrutiny)

You don't need to submit these documents while filing, but you must retain them for at least 6 years from the end of the assessment year in case the Income Tax Department asks for verification.

How to Claim Section 80E When Filing Your ITR

Step 1: Get your interest certificate

Contact your bank or NBFC and request a certificate that breaks down your repayment into principal and interest for FY 2025-26. Most lenders provide this through their online banking portal or on request.

Step 2: Choose the old tax regime

Since Section 80E is not available under the new regime, ensure you select the old regime. If you're salaried, you may need to inform your employer of this choice as well.

Step 3: Enter the interest amount in your ITR

In ITR-1 or ITR-2, navigate to the deductions section. Under Section 80E, enter the total interest paid during the financial year. 49Tax's AI automatically identifies this deduction if you upload your loan interest certificate, saving you the manual work.

Step 4: Verify and file

Cross-check the amount against your interest certificate, review your total tax computation, and file your return.

Can Both Parent and Child Claim Section 80E?

No. Only the person who has taken the loan can claim the deduction. If a parent takes an education loan for their child's studies, the parent claims the deduction — not the child. If the child takes the loan themselves, only the child can claim it.

However, the person claiming the deduction does not need to be the one who is studying. A parent can take a loan for their child's MBA and claim the interest deduction, provided the loan is in the parent's name.

Common Mistakes to Avoid

1. Claiming principal repayment under 80E Only interest qualifies. The principal repayment of an education loan is not deductible under any section (it doesn't fall under 80C either).

2. Claiming under the new regime If you file under the new regime and include an 80E deduction, the system will either reject it or your return may face scrutiny. Choose your regime carefully.

3. Missing the 8-year window Track when you started repaying. Once 8 assessment years pass from the first repayment year, the deduction lapses even if you're still paying interest.

4. Taking a personal loan instead of an education loan A personal loan used for education expenses does not qualify. The loan must be sanctioned as an education loan by an eligible financial institution.

5. Not obtaining the interest certificate Without a proper certificate from your lender, you have no evidence for the deduction. Request it well before the filing deadline.

Section 80E vs Other Education-Related Tax Benefits

If you're paying both education loan EMIs and tuition fees for your children, you can claim both deductions simultaneously — 80E for loan interest and 80C for tuition fees — as long as you're under the old regime. For more on 80C, see our complete Section 80C deductions guide.

Key Takeaway

Section 80E is one of the few deductions with no upper limit, making it especially valuable if you have a large education loan. The catch: it's only available under the old tax regime and only for 8 years from when you start repaying. If you or your children have an education loan, factor this deduction into your regime choice — in many cases, the unlimited interest deduction under 80E, combined with other deductions like 80C and 80D, can make the old regime significantly cheaper than the new one. Start by getting your interest certificate from your lender and running the numbers for both regimes before you file.