Benefits of Education Loan To Raise Funds
10 Nov 2022
Table of Content
Benefits of Applying for Education Loan
- The interest rate on education loans is lesser than on personal loans.
- Education loans come with a moratorium period, the time until which the EMIs don’t start or the student is not required to make any payments to the bank.
- Education loan interest subsidy schemes by GOI gives the waiver of the education loan interest charged during the moratorium period to the economically weaker section
- Section 80E of the Income Tax of 1961, enables the borrower to avail of the education loan income tax exemption.
What are the Tax Benefits of Education Loan?
As the cost of education continues to sky-rocket, students have little choice but to take out an education loan. Thankfully, the government offers some respite on education loans in the form of education loan tax benefits. Here’s all you need to know about education loan tax benefits under Section 80E of the Income Tax Act:
• Section 80E of the Income Tax Act of 1961
Students intending to take a loan for higher studies, also known as an education loan, can avail tax deductions under Section 80E of the Income Tax Act of 1961. This section of the IT Act specifically caters to education loans. Students may avail education loan tax exemptions for pursuing higher education in India or abroad.
Students who’ve opted to go abroad for higher education often incur higher expenses as compared to those pursuing higher degrees in India. Apart from paying high tuition fees, they also have to incur costs such as boarding or dormitory charges, travel costs, purchasing study materials and equipment (engineering boards, laptops, etc.) Keeping all these expenses in mind, the government introduced Section 80E of the IT Act. Under this section, students can avail some relief in repaying the interest component of their education loan.
• What is covered under Section 80E?
- Under Section 80E of the IT Act, students can avail income tax benefit on education loan, when they become taxpayers.
- The tax benefit is extended on the interest portion of their education loan under Section 80E.
- The 80E specific deduction does not apply to the principal loan amount.
- While calculating the annual taxable income, students can deduct the entire amount paid as interest, while repaying the loan, i.e. the interest amount paid against the education loan is not taxed.
- You can avail deductions on the entire interest component of the loan.
• Terms and Conditions under Section 80E
To avail education loan deduction in income tax under Section 80E, you need to consider the below terms and conditions:
- You can avail tax deductions on education loans taken on behalf of your children (biological and adopted) or your spouse.
- Under 80E, you may also avail the deduction if you are the legal guardian of the student.
- You can avail 80E deductions only if you have applied for the loan from a recognised financial institution like a bank or an NBFC, or a charitable institution.
- You may not avail 80E deductions if an employer or a relative sanctioned the loan.
- 80E deductions are applicable only for individuals availing the loan and not Hindu Undivided Families (HUFs). Companies or firms can also not avail 80E deductions.
Today, most students have to rely on education loans to get into a good school. Keeping this in mind, the government also offers student loan tax deductions of ₹150,000 on the principal loan amount under Section 80C of the IT Act.
Voice Payments: The future of Payment technology
Car Loan Process in India - A Complete Guide
The Ship Robots
How to Calculate Recurring Deposit Interest Rate?
Know how to get FASTag for your vehicle
Home Loan Principal & Interest Rate Explained
Your Complete Guide To The Home Loan Disbursement Process
Banks Hike FD Rates for Senior Citizens - Is it Time to Invest?
Gold Loan vs Personal Loan - Which is Better & Why?
Catalyzing Finance for a nature-positive growth
How does an EMI on debit card work?
A Complete Guide to Two Wheeler Loan
How to Calculate EMI for Bike Loan: Tips and Tricks
Complete Bike Loan Closing Procedure
CIBIL Score for Bike Loan
Bike Loan Documents
Get Instant Two Wheeler Loan Approval
Advantages of Bank of Baroda Two-Wheeler Loan
How To Get A Bike Loan?
Tips to Qualify For Availing Loan Against Security
The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
Features and Benefits of Car Loan
The greatest advantage of a car loan is the ease with which you can possess a car with a bit of planning. A loan allows you to improve your lifestyle if you create an advanced strategy to tackle expenses while meeting other investments that you are already committed to. Owning a car not just improves your social status, but also acts as a huge advantage offering freedom to travel where and when you want at your ease. Apart from these advantages, a loan comes with many other features and benefits. We will help you understand all the features and benefits of a car loan.
A Complete Guide to Home Loan
For those looking to own a home, banks and other financial institutions offer loans for that purpose at competitive interest rates. So if you already have that dream house in sight, the next step isn't too hard.
Leave a Comment
Thanks for submitting your details.