Mr. Sen repays his education loan in equated monthly instalments that cover principal and interest, and the bank also charges a processing fee. Which amount is deductible under section 129 of the…
Question and options
Mr. Sen repays his education loan in equated monthly instalments that cover principal and interest, and the bank also charges a processing fee. Which amount is deductible under section 129 of the Income-tax Act, 2025, assuming he has opted out of the section 202 regime?
The interest paid on the loan
Both the principal and the interest repaid
The processing fee paid to the bank
The principal repaid on the loan
Answer and explanation
Section 129(1) allows a deduction of the amount paid as interest during the tax year on a loan for higher education; there is no monetary cap. Repayment of principal is not covered by section 129, and the section does not reach charges such as processing fees.
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