Thanks to education loans, pursuing higher education is no longer a privilege that’s exclusive to the upper echelons of our society. Irrespective of what type of education you seek, an education loan from a respected loan agency is the most effective way to fund one’s pursuit.
That being said, not many know that there are enticing tax benefits attached to student loans. No matter who you are, whether you are a primary borrower or a co-borrower, you can easily avail of tax deduction benefits on the total interest component of the loan.
However, there are certain parameters that one must fulfil to qualify for tax deduction benefits. That is what our primary topic of concern will be for this article.
So, without much further, allow us to shed light on 5 things that everyone should know about tax benefits associated with education loans in 2022
1. Eligibility Criteria
As per section 80E of the Income Tax Act, the following individuals are eligible for tax benefits on an education loan.
· A parent taking out the loan on behalf of their child as either a co-signee or the primary borrower.
· A spouse paying the loan
· A student can claim this benefit from their taxable income after he or she has secured a job
· A legal guardian paying the loan on the child’s behalf can also claim this benefit.
2. The Loans Purpose
According to the same law, an individual is only eligible to claim this benefit for an education loan taken out in pursuit of higher education in India or abroad. Higher education will involve a full-time course or its equivalent that is recognized by the authorized board. Tax benefits also apply to loans taken out for post-graduation degrees and vocational courses as well.
3. The Deduction
Tax benefits on education loans are only available up to a certain period. With the inclusion of the first year of repayment, you are only allowed to claim a tax benefit on the interest for a period of 8 years max.
4. The Deduction Period
If you are running a cramped-up retail store or a restaurant that is continuously experiencing heavy customer demand, then you’ll have to expand the space in your premises to make your customers more comfortable. We suggest going for a business loan to improve the space in your premises for the comfort of both your staff and customers, especially if you are running a successful business.
5. Financing Source
It is also important to note that tax benefits are only available on student loans acquired from a reputable bank, financial institution, or charitable organization. Loans taken from family and friends do not qualify.
The Bottom Line
Keeping the above things in mind lets you get the most out of your acquired education loans. If you wish to learn more about tax benefits or need help securing a student loan, we suggest you waste no time hiring us at Findestination as your loan consultant.
Call now to schedule an appointment with one of our loan experts today.