i have taken a education loan from SBI in 2007,2008 and 2009.The principal amount is 345000/- at 13% interest. Now i am paying an EMI of 7000/-. As learned from section 80E that the interest on the principal amount is valid for tax rebate. Now i want to know whether this 7000/- EMI contains only principal amount or it is both principal amount+interest and how can i avail the tax benefits?

Hello Ankytjayn, Thats right, when you take a loan for education you can avail tax benefit on Interest paid towards it U/S 80 E.In your case the EMI paid by you compose of both principal and interest.Lets work out your Interest and principal component which you pay in a year Loan Amount 345000 Interest: 13% Tenure: 6 years (assumed as u have not mentioned) EMI:7000 (exact EMI working out to be 6925) In 2007, total amount paid towards loan is 6925*12= 83100 (42486(Interest)+40621(Principal)-42486 interest amount is eligible for deduction u/s section 80E In 2008, total amount paid towards loan is 6925*12= 83100 (36879(Interest)+46227(Principal)-36879 interest amount is eligible for deduction u/s section 80E In 2009, total amount paid towards loan is 6925*12= (30498(Interest)+52608(Principal)-30498 interest amount is eligible for deduction u/s section 80E In 2010 total amount paid towards loan is 6925*12= (23236(Interest)+59870(Principal)-23236 interest amount is eligible for deduction u/s section 80E In 2011,total amount paid towards loan is 6925*12= (14972(Interest)+68134(Principal)-14972 interest amount is eligible for deduction u/s section 80E In 2012,total amount paid towards loan is 6925*12= (5567(Interest)+77538(Principal)-5567 interest amount is eligible for deduction u/s section 80E Hope the calculation will be useful for o avail income tax benefit u/s 80 E. Further issues keep posting Note: Amounts are rounded of nearest rupee

 Hi Alapati,

That's a great answer. Very detailed one too. 

Regards

Hi Alapati, Thanks for such a detailed reply. regards ankytjayn

Hi Alapati,  

That's a very good answer. It helped me too.  

  

Regards