Section 129
Section 129: deduction for interest on an education loan
Section 129 is the Income-tax Act, 2025's version of the deduction long known as "80E" - it lets an individual deduct the full amount of interest paid on a loan taken for their own or a relative's higher education, with no upper rupee cap, for a limited number of years.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
What Section 129 allows
An individual can deduct interest paid during the tax year on a loan taken from a financial institution or an approved charitable institution, provided the loan was taken for pursuing higher education of the individual or a relative, and the interest is paid out of income chargeable to tax.
There is no cap on the amount of interest that can be deducted - the entire interest paid qualifies, unlike most other deductions in this chapter which are capped at a fixed rupee amount.
How long the deduction runs
The deduction is available starting from the "initial tax year" - the year the assessee starts paying interest on the loan - and continues for that year plus the seven tax years immediately following it (eight years total), or until the interest is fully repaid, whichever happens first.
Key definitions
- "Higher education" means any course of study pursued after passing the Senior Secondary Examination (or its equivalent), from an institution recognised by the Central or State Government or a local authority.
- "Relative" means the individual's spouse and children, or a student for whom the individual is the legal guardian - so a loan taken for a spouse's or child's education also qualifies.
- "Financial institution" means a banking company regulated under the Banking Regulation Act, 1949, or any other institution the Central Government notifies for this purpose.
- "Approved charitable institution" refers to certain registered non-profit lenders previously approved under the corresponding provisions of the Income-tax Act, 1961.
Frequently asked questions
Is there a maximum amount I can claim under Section 129?
No - unlike most deductions in this chapter, there is no rupee ceiling. The full interest amount paid during the year is deductible.
For how many years can I claim this deduction?
For the year you start paying interest and the next seven years (eight years total), or until the loan interest is fully repaid - whichever comes first.
Can I claim this deduction for my spouse's or child's education loan interest?
Yes - the deduction covers interest on a loan taken for the higher education of the individual themselves or of a relative (spouse, children, or a student under the individual's legal guardianship).
Does the loan have to be from a bank?
It must be from a financial institution (typically a bank or a Central Government-notified institution) or an approved charitable institution - a loan from a friend or family member does not qualify.
Related sections
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Check your Section 129 education loan interest deduction with our tax teamLast updated 9 September 2026