Prasad
(Sr. Manager)
(617 Points)
Replied 23 February 2015
Education loan does not save tax; interest paid for education loan is eligible under 80E;
Full amount of Interest paid during the financial year will be eligible.
Vishal Goel
(Chartered Accountant)
(1688 Points)
Replied 24 February 2015
Hello,
Only interest paid on an educational loan is allowed as deduction u/s. 80E of The Income Tax Act, 1961, out of his/her income chargeable to tax i.e. Deduction will be allowed only when actual interest is paid. There is no cap on the amount of interest on which one can claim tax Exemption: your entire interest outgo on an education loan is eligible for deduction.
Vishal Goel
(Chartered Accountant)
(1688 Points)
Replied 24 February 2015
Loan should be taken by individual for pursuing higher education of self, spouse or his /her children’s or for the student of whom you are legal guardian. Hence parents are also eligible to claim deduction of interest paid by them on loan taken for their children’s education.
Vishal Goel
(Chartered Accountant)
(1688 Points)
Replied 24 February 2015
The repayment period for the student borrowed starts one year after the completion of the course or six months after he/she secures employment, whichever is earlier. The tax exemption is allowed for the year you start repaying the loan and seven subsequent assessment years. If the loan has been taken by the parent or spouse, they can start repayment immediately after the disbursal of the loan and claim exemptions accordingly.
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