Are education fees tax free?

 I am repaying it with an Equated Monthly Installment of Rs 6,500.

 Can I get a tax exemption up to Rs 40,000 under Section 80E?

- Harish Balakrishnan

To avail of an exemption under Section 80E, the loan should have been taken for full time studies. If yes, then you are eligible for the tax exemption.

However, from the assessment year 2006-07, no deduction will be available under this section for the principal amount that you repay. You will only get a deduction for the interest component.

The interest you pay will be deducted from your income; there is no limit on the amount. It will reduce the tax you have to pay.

No deduction, however, is now available for the principal repayment.

Got it? Interest can be deducted and there is no limit to this amount. The principal amount is not eligible for deduction

The deduction mentioned above will only be applicable when you start repaying the loan. It will be available from the year you start paying interest on the loan and seven immediately succeeding assessment years.

If you pay loan within that time frame, good for you. Once the time frame is complete, no more deductions.

• Need an education loan? Ask these questions

I am doing a part-time course.

I have a receipt of fees paid for that course.

Can I show these as tuition fees in my name and claim a deduction under Section 80C?

- Ankit Goel

Any sum paid as tuition fees for a full time course to any university/ college/ educational institution in India for children is eligible as qualifying amount for deduction under Section 80C.

Read What falls under Section 80C.

The maximum ceiling on the amount of payment is Rs 12,000 per child per year for a maximum of two children.

Considering the above, you will not be eligible to claim deduction.