Student Loans in India : An Education Loan can be highly tax efficient for you

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Student Loans in India
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An Education Loan can be highly tax efficient for
you
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• For most assesses, tax benefits typically revolve
  around Section 80C for insurance premiums and
  provident fund payments, Section 24 for interest
  on housing loan and Section 80D for payment of
  medical insurance premium.
• These are normally the most commonly used
  sections in India. However, there is another very
  important and less talked about provision under
  Section 80E for interest paid on education loans
  pertaining to higher studies.
• The beauty of this provision is that there is no
  upper limit for Section 80E and technically any
  amount can be claimed.
• The only condition is that it should pertain to
  interest paid on an education loan taken for the
  purpose of higher studies.

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• Understanding the basics of Section 80E
• First and foremost it needs to be remembered that
  Section 80E pertains only to individuals and this
  benefit is not available to HUFs (Hindu Undivided
  Family).
• Originally, this benefit was only available if
  you took the loan for your own education. But
  subsequent to an amendment, the Section 80E also
  applies to interest paid on education loan taken
  for self, spouse and for children.
• Interestingly, the benefit can also be claimed in
  case of children for whom you are the legal
  guardian under law, though they may not be you
  own children.

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• From where can you avail the loan?
• The benefit of Section 80E will be available in
  case of loans availed from approved financial
  institutions, banks and approved charitable
  institutions only.
• Informal loans availed from family and friend
  will not be eligible for this benefit. Also the
  definition of higher education is defined to
  include any higher studies post Senior Secondary
  Examination or equivalent level.
• In recent amendments, many vocational courses
  have also been added to the list of eligible
  categories for which benefits of educational loan
  under section 80E can be availed.
• While studies abroad are not included as an
  explicit category, there is no provision that
  bars from claiming the benefit of Section 80E for
  the purpose of studies abroad.

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• For how long can the deduction be claimed?
• The deduction for interest on education loan will
  be available during the assessment year in which
  the loan is availed plus 7 subsequent years after
  that.
• For claiming the benefit under Section 80E, the
  bank which has lent the education loan gives you
  an explicit certificate which clearly states that
  the loan was taken for the purpose of pursuing
  higher education and hence is eligible for
  Section 80E.
• Additionally, the bank certificate also includes
  the detailed segregation of interest component
  for the full year and the principal component.
• As mentioned earlier, the benefit of Section 80E
  is only available for interest component of
  Student loan in India and not for the principal
  component.

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• In short, Section 80E provides a very useful
  method to get a loan for higher education.
• Banks are a lot more flexible on giving loans for
  higher education and do not insist on too many
  documents.
• At a time when higher education costs are going
  through the roof, this provides a very tax
  efficient way of financing higher education for
  yourself as well as your spouse and children.
• Source https//blog.religareonline.com/2016/01/28
  /an-education-loan-can-be-highly-tax-efficient-for
  -you/

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