Today, higher education is vitally necessary due to the increasingly difficult and competitive work market. However, paying for a top-notch higher education is expensive. Education at a private university is three times more expensive than a public one. Education Loan is the easiest way to finance your aspirations when you want to pursue higher education both domestically and abroad. An Education Loan not only pays for your education but also offers great tax advantages.
Currently, remittances (sum of the money) for studies abroad through Education Loans attract a Tax Collection at Source (TCS) of 0.5% whereas if the remittance is not through a loan then the applicable Tax Collection at Source will be an additional 5% on the amount. Many people opt for Personal Loans to complete or go for higher education, whereas they can directly go for Education Loan and claim maximum tax benefits. Education Loans are much cheaper than personal loans and also offer a moratorium period.
Let’s read about the 5 most important facts on Education Loan tax benefits:
Section 80E Income Tax Deduction
A person can claim the 100% interest portion of a Loan under Section 80E of the Income Tax Act.Citizens can make use of Section 80E of the Income Tax Act, which is targeted solely at the education sector. Only Education Loans are eligible for tax deductions under Section 80E.
Maximum tax deduction amount
Under Section 80E of the Income Tax Act, you may claim the cost of Education Loans as part of the tuition fee you pay to any college, university, or other educational institution. On courses that you, your spouse, and your children enroll in, you can claim Education Loan tax benefits. You can claim such debts from your taxes in India whether you took out an Education Loan for a study in India or overseas.
Eligibility for tax deductions
Only individual taxpayers are eligible for Education Loan tax benefits. Under Section 80E of the Income Tax Act, Hindu undivided families (HUFs) are not eligible for tax deductions.
If the following conditions are met, you can claim tax advantages for an Education Loan:
- You have obtained a Loan for your child;
- You obtained the Loan for your own use;
- You obtained the Loan on behalf of your spouse;
- You are the borrower’s legal guardian, according to the Loan application.
Tax deduction criteria
You must be aware that the tax advantages are only applicable to the interest portion of Education Loans and not the principal amount. There is no upper limit to your savings, and you can deduct all of the interest that is due in a given fiscal year.
Tax benefits from Banks and NBFCs
Section 80E tax deductions are only available if you borrowed money for your study from a legitimate Bank or Non-Banking Financial Companies (NBFC). Therefore, if you borrow money to pay for your higher education from a friend or a relative, you will not be eligible for any tax benefits.
In conclusion, you can lower your taxable income and finance your further education with the aid of an Education Loan. However, keep in mind the above instructions while claiming income tax advantages for Education Loans. With RULOANS, you can meet your life goals by choosing the right lender. With our expertise in finance, we are here to guide you through the process. Visit https://www.ruloans.com/personal-loan.htm for more information!