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CA Intermediate · Taxation · Deductions from Gross Total Income

Rohan, a salaried resident individual who opts for the old tax regime, took an education loan for his daughter's postgraduate course in India. During tax year 2026-27 he repaid Rs 1,80,000 in EMIs, of which Rs 62,000 was interest and Rs 1,18,000 was principal. The loan is from a bank and this is the third year of repayment. What deduction for education loan interest can he claim for tax year 2026-27?

Rohan can claim Rs 62,000. The education loan interest deduction covers only the interest paid during the year, with no upper limit, for a maximum of eight years from the start of repayment. The principal repayment of Rs 1,18,000 is not deductible under this provision.

  1. ARs 62,000Correct
  2. BRs 1,80,000
  3. CRs 1,18,000
  4. DRs 50,000

Explanation

The deduction for education loan interest covers only the interest portion actually paid out of income chargeable to tax, for up to 8 years starting with the first year of repayment. There is no monetary ceiling. The interest paid is Rs 62,000, so that is the deduction. Rs 1,80,000 wrongly includes principal, and Rs 1,18,000 is the principal alone.

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