Section 129 — Deduction in respect of interest on loan taken for higher education

(1) An assessee, being an individual, shall be allowed a deduction of amount
paid as interest during a tax year, subject to the provisions of this section,
on a loan taken by him from any financial institution or any approved charitable
institution, if the—
( a) loan taken is for the purpose of pursuing higher education of himself or
his relative; and
( b) payment is made out of his income chargeable to tax.
(2) The deduction referred to in sub-section (1) shall be allowed in computing the
total income in respect of the initial tax year and seven tax years immediately suc-
ceeding the initial tax year, or until the interest referred to in sub-section (1) is fully
paid by the assessee, whichever is earlier.
(3) For the purposes of this section,—
( a) “approved charitable institution” means a registered non-profit organi-
sation where it was approved earlier under the provisions of section
10(23C) of the Income-tax Act, 1961 (43 of 1961), or an institution
referred to in section 80G(2)(a) of the said Act;
( b) “financial institution” means a banking company to which the Banking
Regulation Act, 1949 (10 of 1949) applies (including any bank or banking
institution referred to in section 51 of that Act) or any other financial
institution which the Central Government may, by notification, specify;
( c) “higher education” means any course of study pursued after passing the
Senior Secondary Examination or its equivalent from a school, board, or
University recognised by the Central Government or State Government,
local authority, or by any authority authorised by the Central Government
or State Government or local authority to do so;
( d) “initial tax year” means the tax year in which the assessee starts paying
the interest on the loan;
( e) “relative”, in relation to an individual, means the spouse and children
of that individual, or the student for whom the individual is the legal
guardian.