Education is one of the biggest investments in life, and many students rely on education loans to pursue higher studies in India or abroad. The Income Tax Act, 1961, provides relief under Section 80E, which allows taxpayers to save on taxes by claiming deductions on the interest paid on education loans.
But with the introduction of the new tax regime, taxpayers often ask: Is 80E benefit available in the new tax regime? This blog will explain Section 80E benefit in new tax regime in detail, compare the old and new regimes, and show examples with actual tax calculations.
What is Section 80E?
Section 80E provides a deduction on the interest paid on education loans.
- Eligibility: Loan taken for higher education of self, spouse, children, or a ward.
- Institutions covered: Only loans from banks, NBFCs, or approved charitable institutions.
- Deduction amount: No maximum limit, but applies only to interest (not principal).
- Duration: Maximum of 8 years or until the interest is fully repaid.
Is Section 80E Available in the New Tax Regime?
Here’s the reality:
- Under the old tax regime, Section 80E deduction is fully available.
- Under the new tax regime, most deductions including Section 80E are not allowed.
So, if you are repaying an education loan and want to save on taxes, you should opt for the old regime.
80E Benefit in New Tax Regime
Example 1: Tax Saving Under Section 80E
👉 Suppose Rohan took an education loan in 2020 and pays ₹1,50,000 as interest in FY 2024-25.
- If he opts for old regime:
- He can claim the full ₹1,50,000 deduction under Section 80E.
- If his income falls in the 20% tax slab, tax saved = 20% of ₹1,50,000 = ₹30,000 saved.
- He can claim the full ₹1,50,000 deduction under Section 80E.
- If he opts for new regime:
- Deduction under Section 80E is not available.
- Tax saving = ₹0.
- Deduction under Section 80E is not available.
👉 Clearly, Rohan benefits more by choosing the old regime.
Example 2: Comparing Old vs New Regime
Let’s take an example of Anita with the following income details:
- Gross Annual Income: ₹10,00,000
- Interest on Education Loan (80E): ₹2,00,000
| Regime | Taxable Income | Tax Payable (approx.) | Benefit |
| Old | ₹8,00,000 (after 80E deduction) | ₹75,400 | ✅ Saves tax |
| New | ₹10,00,000 (no 80E deduction) | ₹78,000 | ❌ No benefit |
👉 Here, the old regime helps Anita save more because Section 80E deduction applies only in old regime.
Key Points to Remember
- Only interest on the loan qualifies, not the principal.
- Deduction is available for a maximum of 8 years.
- Loan must be from a recognized financial institution.
- Foreign education loans also qualify.
- If you want to claim 80E, you must opt for old regime while filing ITR.
Section 80E vs Other Tax Deductions
| Section | Benefit | Limit | Allowed in New Regime? |
| 80C | Investments (LIC, PPF, etc.) | ₹1.5 lakh | ❌ |
| 80D | Medical Insurance | ₹25,000 – ₹50,000 | ❌ |
| 80E | Education Loan Interest | No limit | ❌ |
| 24(b) | Home Loan Interest | ₹2 lakh | ❌ |
👉 The new regime offers lower tax rates, but removes these deductions.
Should You Choose Old or New Regime?
- If you are repaying an education loan, the old regime is usually better since you can claim Section 80E.
- If you don’t have loans or deductions, the new regime may give you lower tax liability.
Conclusion
The 80E benefit in new tax regime is not available, which means taxpayers cannot claim deductions for education loan interest under it. If you want to maximize tax savings while repaying an education loan, you should choose the old tax regime.
Always compare both regimes before filing your return. A simple calculation can help you decide which regime works best for you.