Skip to main content

Claim deductions for education loan

 

India has a distinct stature of producing one of the highest number of graduates every year, however, there's still a large section of students not being able to pursue higher education mainly due to financial constraints.


   Various schemes have been launched and incentives provided from time to time both by the government and the civil society to promote education among the masses.


   In this context, there is a beneficial provision under the Income Tax Act, 1961 (the 'Act'), which provides for deduction to be claimed by an individual in respect of the interest paid on loan taken for educational purposes.


   An individual may claim a deduction out of his total income chargeable to tax for interest paid on loan taken by him from any financial institution or an approved charitable institution for the purposes of pursuing his higher education or for the purposes of higher education of his relative.

Time Period For Claiming Deduction

The deduction can be claimed for eight financial years starting from the year in which the person availing of the loan starts paying the interest or until the interest on such loan is paid in full, whichever is earlier.

Loan To Be Taken From

An individual may avail of loan from a financial institution i.e, bank or other institution as is notified by the government in this respect. The loan may also be taken from an approved charitable institution as specified under the Act.

Higher Education

Earlier, higher education primarily meant full-time studies for any graduate or postgraduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences, including mathematics and statistics.


   The scope of the said provision has been widened significantly to provide support to the individuals to pursue higher education beyond senior secondary examinations by taking necessary education loan as required. Thus, effective April 1, 2010, the higher education has been defined to mean any course of study pursued after passing the senior secondary examination or its equivalent from any school, board or university recognized by the central or state government or such other authority as per the provisions of the Act.

Who Can Take The Loan

It could be taken by an individual either for pursuing his higher education or for the higher education of his spouse, children or student for whom such individual is a legal guardian.

Direct Tax Code

It is quite encouraging to note that even though many of the existing deductions / exemptions are proposed to be done away with under the proposed Direct Tax Code (DTC), however, deduction in respect of interest on loan taken for higher education does find its place under the DTC.

 
   The provisions for claiming deduction under the DTC are akin to the existing provisions under the Act. It is, however, important to note that under the DTC, deduction is proposed to be allowed in respect of the loans taken from financial institutions only.

Important Point To Note

It is pertinent to note that even though the loan could be taken by the child or his parents for the higher education of the child, the deduction can, however, be claimed only by an individual who has taxable income. Therefore, besides other considerations and subject to the facts and circumstances of a particular case, loan may primarily be taken by the individual (parent or student) who has / will have taxable income to claim this deduction.

 


Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund Tata Mutual Fund has decided to merge Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund, with effect from January 16, 2015.   Investors of Tata Indo-Global Infrastructure Fund can redeem/ switch out units from December 13, 2014 to January 12, 2015 without paying any exit load. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Invest Any Mutual Fund Online Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund A...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now