At a glance
| Loan | Tax benefit for a salaried person |
|---|---|
| Education loan | All the interest, for up to 8 years (80E, old regime) |
| Home loan | Interest and principal, mostly old regime (see our home loan guide) |
| Personal loan | None, in most cases |
| Car loan | None, unless the car is used in your own business or profession |
| Credit card EMI | None, and GST is added on the interest |
Education loan: section 80E
- All the interest you pay in the year can be deducted. There's no upper limit. The principal can't be.
- For the year you start paying interest and the next 7 years: 8 years in all, or until the interest is paid off, if sooner.
- The loan must be from a bank, a financial institution or an approved charitable institution, for higher education after Class 12, in India or abroad, for you, your spouse, your children or a student you're the legal guardian of. Loans from family or friends don't count.
- Old regime only.
Interest builds up during the moratorium (the course plus a grace period). Paying it while you study keeps the loan from growing, and your 80E clock starts when you first pay interest.
Personal loans
A personal loan doesn't save tax in itself. Watch the processing fee: it's usually deducted from the money you receive, plus 18% GST on it, so a 12% loan with a 2% fee really costs about 13.7% a year over 3 years.
Car loans
No deduction for a car you use yourself. Many lenders charge for prepaying a fixed-rate car loan; RBI rules stop charges only on floating-rate loans to individuals.
Credit card EMIs
GST of 18% is charged on the interest in each EMI and on any processing fee. A "no-cost" EMI still has that GST and the fee: ₹60,000 over 6 months at 16% with a ₹199 fee costs about ₹3,575 more than the price. That's still far cheaper than carrying an unpaid card balance, which can cost over 40% a year.
Common questions
Is there a limit on the education loan deduction?
No. All the interest you pay in the year can be deducted under 80E, for up to 8 years. The principal can't. Old regime only.
Does a personal loan give a tax benefit?
Not in most cases. A personal loan doesn't save tax in itself.
Is GST charged on credit card EMIs?
Yes, 18% on the interest in each EMI and on any processing fee, including no-cost EMIs.
Can I claim 80E for a loan from my parents?
No. Only loans from a bank, a financial institution or an approved charitable institution count.
Two ways to sort this
Do it yourself
- Get the year's interest certificate from your bank.
- Check the loan is from a bank or approved institution, for higher education.
- Claim the interest under 80E in the old regime, for up to 8 years.
- For card or personal loans, compare the effective rate, including fees and GST, before signing.
Let an expert do it
We check which of your loans save tax and claim them in the right regime.
The first chat is freeWork it out for yourself
- Education loan EMI: EMI, and the 80E deduction on the interest.
- Personal loan EMI: EMI and total interest on a personal loan.
- Car loan EMI: EMI and total interest on a car loan.
- Credit card EMI: The real cost of converting a purchase to EMI.
- EMI: Monthly instalment on any loan.
See your education loan EMI after the moratorium.
Open the education loan calculatorSources
- Tax rules for salaried individuals, AY 2026-27, Income Tax Department
- GST rates for services (financial services, heading 9971: 18%), Central Board of Indirect Taxes and Customs
- No foreclosure charges or prepayment penalties on floating-rate term loans to individuals (7 May 2014), Reserve Bank of India
This guide explains the rules in general. For your own situation, .