Yes, loan for education is one of the easiest and quickest ways to finance higher studies. You are even eligible to avail tax benefits on education loan, as provisioned by the Income Tax Act of 1961. However, certain conditions must be met before you can avail these benefits.
Meeting the essential conditions for education loan tax benefits
When you avail personal finance for higher education purposes, Section 80E of the Income Tax Act makes you eligible for tax deductions on the interest paid on such loans. Here are the ins-and-outs to know before you can claim tax benefits.
Who can claim tax benefits on education finance?
Education loan taxation benefits are only available for the higher education of self, one’s spouse or children, or even a student for whom the loan borrower is a legal guardian.
From where must the loan be taken?
From where you secure your personal loan for education is also a matter of consideration. The loan must be taken from a reputed lending institution or RBI-approved charitable trust. Loans taken from friends or family members do not qualify for tax deductions.
What must be the purpose of taking the loan?
As mentioned earlier, you can avail personal finance for higher education – this includes colleges both within and outside of India.
Additionally, education loans can also cover all fields of study pursued after completing a senior secondary examination, or its equivalent. This even includes both regular and vocational courses.
What is the tax deduction amount?
The Income Tax Act sets no maximum limits on the tax benefits. But, only the total interest paid on loan is eligible for a tax deduction – no such deductions are allowed on the principal loan amount.
Additional Read: How to Save Tax on Education Loans
What is the period of deduction?
Tax deductions on the total interest paid will begin from the year in which you start your loan repayment. However, the period for such deduction only extends up to a maximum of 8 years, or until the interest on the loan is fully repaid, whichever is earlier. Such a condition makes it advisable to pay off one’s loan within a period of 8 years.
Additional Read: Know about Income Tax Deduction for Education Loan
The bottom line
Want to avail a loan for education at attractive personal loan interest rates? If so, then turn to Tata Capital – one of India’s leading lending institutions.
We offer customised loans as per your requirements. Simply use our online personal loan EMI calculator and adjust the loan amount and tenure. Plan out your loan in advance to have a smooth repayment experience.
Our personal loan eligibilitycriteria are relaxed for your convenience. Contact us to know all the details today!