Education Loan: How much tax exemption is available on education loan. It is important to understand about this rule before filing ITR.
Education Loan: At present, the time of admission in all professional courses including engineering is going on. Many students take education loan for studies. If any child in your household has also taken an education loan, then it is important to understand the tax exemption available on it. Before filing ITR, it is important for you to know about the exemption or exemption available on it. You can avail tax exemption on the interest paid on the education loan.
Tax exemption can be available on the cost of studies
You can avail tax exemption of up to Rs 1.5 lakh under Section 80C of Income Tax for expenses incurred on education of two children. On the other hand, if you have more than two children, then you can claim this for any two children. You can take this exemption only on the expenses incurred on full time education. Apart from this, this exemption is only for tuition fees.
Benefit of tax exemption on education loan interest
You can avail tax exemption on interest paid on education loan under Section 80E of the Income Tax Act. Important conditions for claiming such deduction are that the loan should be taken by a woman or her husband or children from a bank or financial institution for higher education (in India or abroad). This deduction can be claimed from the year in which the loan repayment starts and for the next 7 years or before the loan is repaid, whichever is earlier.
Tax exemption will be available even if you take education loan of more than 1 child
If you have 2 children and you have taken an education loan for both, then you can avail tax exemption under section 80E on the interest paid for both the loans. There is no maximum tax exemption limit.
Understand complete mathematics through example
Suppose you have already taken an education loan for your daughter and you are availing tax exemption on annual interest on it. Now if you are taking an education loan for your son’s education as well, then you can also take advantage of tax exemption on this.
If you have taken a loan of 10 lakhs each at 10% interest for both, then the total annual interest of Rs 20 lakhs becomes Rs 2 lakhs. You will get the benefit of tax exemption on this entire 2 lakh interest. That is, out of your total taxable income, this amount will be minus.
