It is common that students seeks loans for their education. Many people not aware that the education loans can be used for the tax deductions. From April 2007, the loans taken by self or parent or spouse is also deductible under the tax. There is separate section 80E to provide the tax exemption on the education loans. This can be availed by the parents and the students. In this article I will be writing about the tax deduction for education loans. Please post your feedback after reading the article. You can subscribe to our future articles here.
Key Points on Education Loans
- You can claim a deduction under section 80 E for the interest paid on an educational loan.
- You can claim the tax benefit only if the loan is taken in your name for the higher education yourself, spouse or children. The loan taken for brothers or sisters can not be claimed.
- Entire interest amount is deducted from the taxable income without any limit.
- Principal repayment of the education loan will not be eligible for the tax deduction.
- You can claim tax benefits for eight years after start paying the loan.
- You can claim the tax benefit only when the loan is taken from the financial institutions. If you have taken from family or employer, then it is not eligible for the tax deduction.
- The course has to be for full-time studies (no part-time courses covered) for any graduate or post graduate course in engineering, medicine, management, or for post graduate course in applied sciences or pure sciences including mathematics and statistics.
- You can find interest rates for education loans.
In this article I have listed the few important points on the education loans in India. Many banks offer education loans( eg. hdfc bank) to the students, it will be useful if you know the tax benefits on education loans. Thank you for reading this article. If you have any doubts please post it in the comments section.
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