The Hindu Business Line : Warped view of education

SECTION 80E of the Income-tax Act confers a tax benefit on individuals pursuing higher studies with the aid of educational loans. A deduction not exceeding Rs 40,000 per annum is available for a maximum period of eight years towards the repayment of loan and interest thereon.

The loan must have been taken only from `financial institutions' — banks and other notified financial institutions or from an approved charitable institution.

The higher education pursued should be in the specified disciplines either at the graduate or post-graduate levels. Laudable as the provision is, a deeper scrutiny of it reveals its dangerous and cruel under-belly.

The section implicitly acknowledges the fact that the individual will have taxable income which presupposes that he is either employed or is in business or is otherwise engaged.

How then can he pursue a full-time course? The definition of `higher education' given in the section contemplates pursuance of full-time studies.

A working person cannot possibly pursue full-time studies. There are many office-goers who rush to evening classes at great personal inconvenience but in the hope of embellishing their bio-data.

Surely, their claim for the tax benefit under this section should not fall by the wayside.

Moreover, these days distance education is such a rage. Many who cannot go for full-time education are driven to acquiring distant education with IGNOU and Annamalai University, among others, making it possible for anyone with burning ambition to arm himself with a degree to do so. Their claim too should not fall by the wayside.

In fact, the section blows hot and cold when, on the one hand, it implicitly contemplates a working person qualifying for the benefit conferred by it and, on the other requires, him to pursue full-time studies. If the avowed aim of the section is to goad individuals to seek greater knowledge, it should remove this contradiction forthwith, preferably with retrospective effect. Better still, the section should be broad-based to cover educational loans forwards also.

The truth is whether one pursues higher education or not after having set out to seek livelihood, one invariably wants his wards to do so. And there is no earthly reason why the section cannot encourage that also.

True, Section 88 gives rebate for fees paid to educational institutions in respect of children whether the education obtained is higher or other provided it is out of income that is taxable.

This leaves those who pay fees for their wards out of educational loans in the cold. As it is they can neither utilise the Section 88 rebate nor the Section 80E deduction.

For good measure the requirement of full-time education should apply to wards. It obviously cannot apply to parents seeking further enlightenment.

(The author is a Delhi-based chartered accountant.)

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