Income Tax Exemption on Education Loan, Student Loan
In order to pursue higher education, students tend to take an education loan from a financial institution to create a smoother career goal. The credit is available for students from or after class 12. When the person starts earning, the loan is repaid in small instalments along with interest charged.
Tax Rebate on Education Loan
- U/S 80E of the Income Tax Act, one can avail deductions on the existing educational loan.
- These tax benefits can be enjoyed only if you take a loan from an approved financial institution.
- The loans are offered to students only on the subjects they opt after completion of senior secondary schooling in India or abroad.
- The tax deduction is possible only on the amount of interest to be paid for the loan amount.
- The deductions are permissible only for the loan repayment period or 8 years, whichever is less.
- However, there is no limit to the amount of interest for you can claim a tax deduction on the entire amount.
- The tax deduction can be claimed only by the person in who's name the loan is been taken.
- The benefits are applicable only if the borrower initiates the loan payment.
- Almost all education loans come up with for a year or half after the student gets the job.
Education loans are entirely for the benefits of individuals to practise a good education. Further, they get a tax benefit while they start a job. One should understand that these deductions are applicable only to the interest amounts.