Skip to main content

Pointers in Education Loan and tax benefits

With growth in economy ,rampant changes occurring in the psychological behavior regarding education, changes in spending patterns and increased cost of higher studies, many people are availing loan for educational purpose. Banking sector has been witnessing growth in education loan vertical. Education in abroad costs higher when compared to India. So parents tend to avail an education loan to bear the expenses related to higher studies.

Government has introduced section 80E to encourage the citizens to study further and thus save their taxes. 

What is Section 80E? 

DEDUCTION IN RESPECT OF LOAN TAKEN FOR HIGHER EDUCATION.  

Who can claim deduction?

INDIVIDUALS only. The deduction can be claimed by the individual who has taken the loan and who is responsible for repayment of such loan from his income.

What is the eligible amount?

INTEREST repayment of education loan.

From where should the loan be taken?

Loan should have been taken from a FINANCIAL INSTITUTION (or) approved CHARITABLE INSTITUTION. So loan taken from relatives or friends does not qualify for 80E deduction.

What does higher education mean?

All courses pursued after Secondary School Education(SSE). The course should be  a FULL-TIME course.

How long can the deduction be claimed?

Deduction can be claimed for 8 assessment years (or) until the loan is paid in full along with interest whichever is EARLIER.

What is the amount of deduction allowed?

There is NO limit on the amount of deduction that can be claimed.

Can we claim interest on loan taken for studying abroad?

Yes. Provision says loan taken for higher education in India (or) abroad.

Loan paid for whom can be allowed as deduction?

Loan taken for Self, Spouse, Children or for whom the assessee is legal guardian.

When can we start claiming the deduction?

Deduction can be claimed starting from the year of repayment of loan. Interest payment can be claimed in the year of ACTUAL PAYMENT OF INTEREST.

Composed by
CA.Konda Mounika FCA,BBM,DISA








Comments

Post a Comment

Popular posts from this blog

LLP vs Partnership Firm

In terms of safeguarding the personal assets from financial losses occurred during course of business, LLP is the best option. The following post enumerates the concept in detail. Any business owner shall think of continuity of business irrespective of the members joining or leaving the entity. The status of the entity should remain same in case of death or insolvency or bankruptcy of any member so that the interest of other members are safeguarded. Hence, LLP can be treated as best option that any business owner can choose. WHAT IS A PARTNERSHIP FIRM? An association of two or more persons who have agreed to share the profits of a business which they run together. The liability of partners is unlimited with respect to capital. The losses can be recovered from the personal assets of partners. WHAT IS A LIMITED LIABILITY PARTNERSHIP? A business entity in which the partners liability is restricted to the capital contribution by them. Let us understand various concepts under Private limite...
Post a Comment
Read more

PRIVATE LIMITED COMPANY vs LLP

In terms of safeguarding the personal assets from financial losses occurred during course of business, Private limited company and LLP are the best options. The following post enumerates the concept in detail. Any business owner shall think of continuity of business irrespective of the members joining or leaving the entity. The status of the entity should remain same in case of death or insolvency or bankruptcy of any member so that the interest of other members are safeguarded. Hence, Private limited company and LLP can be treated as best option that any business owner can choose. WHAT IS A PRIVATE LIMITED COMPANY? It is a form of business entity where the shares are held privately.  The shares of a private limited company CANNOT be traded in public. The liability of each member is restricted to the capital contributed. WHAT IS A LIMITED LIABILITY PARTNERSHIP? A business entity in which the partners liability is restricted to the capital contribution by them. Let us understand var...
Post a Comment
Read more

Taxation on sale of listed equity shares for FY 2024-25

Understanding the tax implications on sale of equity shares. Taxable Event: When the listed equity shares are sold. Capital Gain: When the sale price is more than purchase price. Capital Gain= Sale Price - Purchase Price - expenses on Sale (brokerage, commission etc) Capital Loss: When the sale price is less than purchase price. Long Term Capital Gain:  Holding Period: Shares are sold after holding them for a period of more than 12 months. Tax Rate: Long term Captial Gains are exempt upto Rs.125,000 per annum (For FY 2024-25) Long Term capital gains will be taxed @12.5% with respect to equity shares sold after 23.07.2024. Long Term capital gains will be taxed @10% with respect to equity shares sold between 01.04.2024 to 22.07.2024. Note : LTCG will be calculated on gains exceeding Rs.125000 only. Short Term Capital Gain:  Holding Period: Shares are sold after holding them for a period of lessthan 12 months. Tax Rate:  Short Term capital gains will be taxed @20% with ...
Post a Comment
Read more