Get Tax Benefits with A Personal Loan for Education
Guru Prasad is a Bangalore-based software engineer who has always dreamt of pursuing a Master’s degree from an international university. As luck would have it, his employer requested him to move to a client location in Chicago for a two-year period. This presented him with the opportunity to apply for an MBA from the University of Chicago, while continuing his job.
But the tuition fee of his course was quite high and he realised he would need assistance to finance his higher education. Guru inquired at his bank about an overseas education loan. But they asked him to provide collateral because the loan amount was high. A friend then suggested that he look at a Personal Loan for Education. This would ease his worries and help him save tax.
Higher studies abroad can be expensive. That is why taking a loan is unavoidable. But it is not easy to get a big education loan without any family backing. If you have no guarantor, you would have to provide some security for availing the loan. This is where a Personal Loan for education could help. You would not need collateral or a guarantor to avail it. Personal Loans also offer more flexibility with regard to repayment. Besides, such a loan would also bring you tax benefits under Section 80E of the Income Tax Act 1961.
Also Read : How to Get Tax Benefits on Personal Loan?
Tax Benefits Under Section 80Eapp
- Section 80E offers deductions on the interest paid on loans taken for higher education. Any principal payments made towards the loan do not qualify for the deduction.
- The deduction is over and above the normal limit of Rs 1.5 lakh available under Section 80E.
- Did you take the loan for yourself, your spouse, or your children? If so, then the interest payments are eligible for deductions under Section 80E. You can also avail this tax benefit if you are a legal guardian of the student. In the latter case, the loan must be in your name.
- You must take the loan from a bank or an eligible financial institution in India to get the tax benefit.
- There is no upper limit on the interest that you can claim as deductions. The full amount of interest can be deducted from your taxable income. There is also no cap on the rate of interest that is eligible for deduction.
- The benefit is available for up to eight years or until loan repayment, whichever is earlier.
Tax Benefit for Individuals within the 30% Tax Bracket
There is a major benefit for individuals in the highest tax slab. There is no cap on the interest amount that is eligible for deduction. Say, the interest paid on the loan is Rs 1 lakh in the current financial year. You can deduct the entire interest amount from your taxable income. By doing so, you save almost Rs 30,000 in tax.
The bottom line
Given such tax benefits, it is good to apply for a Personal Loan. Use it to fund your higher education dreams. Set aside your financing worries. Apply for a Personal Loan for education and reach for the sky.