How to deduct Education Loan Interest?

A Salaried Employee or any any other Taxpayee (Individual Assessee) can get deduction in respect interest paid on Education Loan taken from the financial institution or Bank for pursuing higher education either for himself or for specified relatives.

As far as the deductibility of the interest amount is concerned, it may be noted that-

• The deduction is allowed in computing the taxable income of the initial assessment year (i.e., the assessment year in which the assessee starts paying the interest on the loan) and 7 year immediately succeeding assessment years ( or until the above interest is paid in full, whichever is earlier)
• No deduction is admissible towards Principal repayment.
• Interest has to be paid out of the income chargeable to tax.

Taxpayee can claim deduction towards the interest paid on education loan taken by him as a co-applicant and it can be paid any time during the financial year out of his/her income chargeable to tax