What are the Tax Benefits from Education Loan
In a country like India if you need a good and higher education you have to lose your pocket and sometimes your personal savings too. Continuous increase in education funds has become a headache for the parents today. Also, the pace in another sector like in tax on income, daily expenses are the factors that breaking the parents’ backbone.
So in this dilemma, parents need support and relaxation to make their dream become true through children. In this condition, parents approach for education loan. Now we will explain in this article how you can avail tax benefits from an education loan
What is the scenario of deduction?
To encourage education loans, there is a tax benefit on the repayment of the education loan under Section 80E of the income tax act. Once you take away an education loan, the interest paid (which is a component of your EMI) on the education loan is allowed as a deduction under Section 80E. In this scenario, a borrower can claim for the deduction from the income tax, respectively the amount of interest rate you are charging on taken loan. There is no relaxation to the repayment of the loan amount that stays as it is. There Is no such hurdle to claim to tax benefit to tuition fee paid from loan and interest rate on that.
When can you claim the deduction? And for how much time it is going?
- The deduction from tax is equivalent to the number of interest rates paid by you to the bank. You should remember to take a certificate after paying the interest.
- The deduction gets started when a person pays off his first EMI for the loan.
- This deduction is going up to eight years after the claim in the loan tenure period.
- In case you stop this deduction during the education period, then it will start later. And no one obeys to claim beyond the constitutive period of eight years.
What are the courses to elect for deduction benefit?
There are some courses which are considered to take deduction benefit as follows:
- Education loan to pursuing any course after senior secondary education is covered for this purpose. Before the 2009 budget, it was only for regular courses like graduation and post-graduation, engineering or medical, etc.
- The course must pursue from a government-approved school, college or university.
- The reduction in tuition fee, you can claim for fee relaxation if two children are studying under section 80 C. In both cases, if education institutes in India or outside India.
Who can claim for the deduction?
A person can claim for the deduction if they have taken a loan for their child’s education, for their spouse, and for a child for whom they serve as a guardian. It is advisable to take a loan for your own or your children.
Points to remember
The point is simple, there is no such hard thing to get an education loan, the government is trying and working in directions of making certain education to everyone This something given for a time is useful for students and even those who are given work and desire to go after higher education after a few years of work experience.
Repay the loan within the decided time, otherwise, a defaulter tag will get fixed with your name. As an outcome, your credit history will be bad, and chances of approval will be less.