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Tax Benefits on Home Loans & Educational Loan


Learn about tax benefits on Home Loans & Educational Loans. View the presentation to read more about tax exemptions on different loans. – PowerPoint PPT presentation

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Title: Tax Benefits on Home Loans & Educational Loan

Tax Benefits on Home Loans Educational Loans
(C) Axis Bank Ltd.
Tax Benefits on Different Types of Loans
  • While taking a loan allows you to fulfill
    requirements like buying a house or financing
    your childs education, the repayment of this
    loan along with the interest levied on it, does
    affect your monthly as well as annual finances
    for other expenditures.
  • However, there is an additional beneficial side
    to loans which is the tax saving angle.
  • The Indian Government allows tax benefits on
    different types of loans.
  • As per different sections of the Income Tax Act,
    1961, loans can be used as tax saving instruments
    as well.

(C) Axis Bank Ltd.
Tax Benefits on Home Loans
  • When taking a home loan for purchasing a
    property, an individual is eligible for tax
    deductions on both principal amount as well as on
    the interest that is paid for servicing the loan.
  • Deductions on Principal Amount
  • Tax benefits for the principal loan amount as
    defined under Section 80C of the Income Tax Act,
    1961, now allows a maximum deduction limit of
    1,50,000 INR and this amount is inclusive of
    other tax saving investments as well.
  • These deductions are applicable only once the
    construction of the property is complete and not
    for the time period during which the property was
    under construction.

(C) Axis Bank Ltd.
Tax Benefits on Home Loans
  • Deductions on Interest Amount
  • Section 24 of the Income Tax Act has certain
    provisions that allow tax benefits on the
    interest paid on the principal loan amount.
  • For construction or purchase of a new property,
    you are eligible for deduction of up to Rs. 2
    Lakhs for the interest amount paid, if the
    property construction was completed within 3
    years from the end of the financial year in which
    the loan was issued.
  • If the property is not acquired/constructed
    completed within 3 years from the end of
    financial year in which the loan was taken, the
    interest benefit in this case would be reduced
    from 2 Lakhs to Rs 30 thousand only.

(C) Axis Bank Ltd.
Tax Benefits on Educational Loans
  • Unlike home loans, only the interest on
    repayments is applicable for deduction and not
    the principal amount.
  • As defined in Section 80E of Income Tax Act,
    1961, this deduction is applicable only for an
    individual for higher education with no fixed
    upper limit.
  • Here, higher education can be defined as any
    course that you pursue after Senior Secondary
    School Level in India or abroad.

(C) Axis Bank Ltd.
Tax Benefits on Educational Loans
  • It is important to understand that the education
    loan should be taken from a financial or approved
    charitable institution, to be eligible for tax
    benefits and you can avail this tax benefit for a
    maximum period of 8 years or full loan repayment
    period, whichever is applicable.
  • For e.g., if you have paid off your education
    loan within 5 years of the course completion,
    deduction benefit can be availed only for that
    time frame and not beyond that.

(C) Axis Bank Ltd.
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(C) Axis Bank Ltd.