- Do you know you can claim tax benefits on an education loan?
- But you need to keep certain things in mind to avail off the benefits, read this to know the same
Want to save on tax then make sure that you know about it first. As per the income tax act 80E, you can save tax on your annual income. This helps the borrower to save interest on education loans. You can save the interest amount of your education loan under ITA 80E, but before claiming the benefits there are a few points that you need to know. Read the post further to know the same.
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Points to Remember before Claiming Tax on Education Loan
- The income tax benefit is claimed on the interest payment.
- Effectively, the interest of your education loans can be deducted while calculating taxable income.
- There is no limit of deduction in respect of interest on loans for higher education.
- An individual gets tax benefit if he/she has taken an education loan to support higher studies for self, spouse, children. Relatives and siblings aren’t eligible for the income tax benefit.
- Only one individual can claim the tax benefit on his/her name.
- You can claim the tax benefit on loans taken for overseas studies too.
Tax Benefit on School Education
You can claim tax benefit on the schooling education of your child under the income tax act of 80C, 1961. The maximum benefit of INR 1.5 lakh can be claimed by the borrower on the tuition fee payment. If you have borrowed an education loan from the bank or financial institution for the school funding needs of your child, you can claim the deduction on your tax slab. Only the tuition fees are eligible for the tax benefit, which won’t apply to development fees, annual fees and donations.
How to Claim & Who can claim Tax Benefits?
To claim the benefits of your education loan, you need to mention all your financial details on the investment declaration form and submit it to your organization. If the details submitted by you are genuine, the tax deductions will take effect. If the student goes for abroad studies and gives up his Indian citizenship, the tax benefit would be reversed.