How to claim tax benefits on an education loan?

How to claim tax benefits on an education loan?

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Your child has many aspirations to fulfil and aims to lead an independent life. They want the best education with all the amenities to pursue their dreams without any hindrance. You require adequate funds to invest in their education and give them the freedom to accomplish their missions. Some courses require lots of money, especially if they are specialised ones.

An education loan is one of the easiest ways to finance higher studies. You can avail of tax benefits on the loan amount as provisioned by the Income Tax Act, 1961. It would help if you met some conditions before availing of these benefits.

Tax benefits

When you avail of a student loan for higher education, you get tax deductions under Section 80 E of the Income Tax Act on the education loan interest rate. These tax benefits are only available for higher education purposes for self, spouse, children and even as a legal guardian to a student.

The lender

The place from where you secure your education loan in India is also a matter of consideration. You should apply for a loan from a reputed lending institution or RBI-approved banks to get the tax deduction. You can also apply for the loan online using the official website or app of the lender or bank.

The purpose

Apply for student loan for all academic courses, including colleges within India and outside the country. Additionally, these loans cover all fields of study pursued after completing a senior secondary examination or its equivalent, including regular and vocational courses.

The deduction amounts

With a study loan, the Income Tax Act sets no maximum limits on tax benefits. Only the total interest paid on the loan is eligible for a tax deduction – no such deductions are allowed on the principal loan amount.

The deduction periods

Tax deductions on the total interest begin when you start repaying your student loan in India. However, the deduction period only extends up to eight years or until the interest on the loan is fully repaid, whichever is earlier. You can also use the education loan EMI calculator to get the approximate interest to pay towards the instalments.

How can you find the best scheme?

Nowadays, technology has enabled you to apply for education loan online. You can cut down the hassles of paperwork and get the quotations instantly from the lender or bank website. It saves lots of time and travel. You can access it worldwide and avail of the loan to meet various academic expenses. It will help your child aim for better opportunities.

Conclusion

You can compare different schemes available in the market and choose an affordable one without visiting the bank or lender personally. Fill the application form, fulfil the eligibility criteria, upload the documents, and submit the application online

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