Skip to content

CA Intermediate · Taxation · Deductions from Gross Total Income

Rahul, a resident individual who has opted for the regime that allows Chapter-VIII type deductions, took an education loan from a bank for his daughter's higher studies in engineering. In tax year 2026-27 he paid ₹1,00,000 towards principal and ₹48,000 towards interest. This is the second year of repayment. What deduction is allowed for the loan?

The deduction is ₹48,000. Interest paid on an education loan for higher studies of the taxpayer's child is deductible in full, with no upper limit, for up to eight years. The principal repayment of ₹1,00,000 gives no deduction under this provision.

  1. A₹48,000Correct
  2. B₹1,48,000
  3. C₹1,00,000
  4. D₹25,000

Explanation

Only the interest on an education loan taken for higher studies of self, spouse, children or a ward is deductible. The deduction is the full interest paid, with no monetary ceiling, for up to 8 years from the start of repayment. Principal repayment is not deductible, so ₹1,00,000 and ₹1,48,000 are wrong. The ₹25,000 figure is an invented cap.

Did you get it right without looking?

One question tells you little. A timed set on Deductions from Gross Total Income shows your real accuracy, how long you take and where you lose marks.

Practise Deductions from Gross Total IncomeFree diagnostic mock

More Deductions from Gross Total Income questions