Get tax benefits on education loans for higher education abroad?

As per Section 80E, anyone taking loan from any financial institution or approved charitable institution for pursuing higher education, whether in India or abroad, can claim deduction equivalent to the entire amount of interest paid on the borrowed sum for a consecutive period of eight years, beginning from the assessment year in which the individual has started paying the interest on loan or until the assessment year in which the interest is paid by the individual in full, whichever is earlier. The loan can be taken for the education of self, spouse, children or the student for whom the individual is the legal guardian.

Read More

Two way Income Tax benefits of Children's Education Loan with extended limit for Asstt. Year 2015-16.

It is most important part to take Income Tax Relief by two way on only "Children's Education Loan".  Now, a days the Education cost is rising continuously.

It’s a matter of concern for all of us. One relief is the tax benefit provided for spending on children’s education. The Income Tax Act provides a direct deduction on account of fees paid for the education of dependent children. The act also provides for deduction on account of interest on loans taken for higher education of children.

Tuition Fees - relief u/s. 80C:
This deduction in respect of school Tuition fees which is covered u/s. 80C of the I-T Act. A Taxpayee parent can claim a deduction of payment made for tuition fee to any university, college, school or any other educational institution.

The deduction on payments made towards tuition fee can be claimed up to Rs 100,000 for Asstt. Year 2015-16, together with deduction in respect of insurance, provident fund and pension.

But, there are certain conditions to get this. It can only be claimed in respect of two dependent children and for fees to an educational institution within India and, for tuition fee only. Payment as donation or development fee to an educational institution does not qualify.

Interest on Education Loan - relief u/s. 80E :
Second Tax benefit is deduction on the interest paid for a loan taken for the purpose of higher

As the benefit can be claimed by the parent as well as the child, the person taking the education can start claiming this deduction once he starts earning and paying the interest himself. There is no cap on the amount up to which the deduction can be claimed.

The loan in this regard can be taken from any financial Institution or charitable institution recognized by the central government. It can be claimed on a loan taken for education anywhere in the world.

education. This is available u/s. 80E of the I-T Act. This benefit can be claimed for a loan taken for education of yourself, your spouse, your children and the child for whom you are a legal guardian. It can be claimed for eight years in a row, beginning from the year when the interest payment starts.

Read More

Income Tax Deductions Under Section 80E.

An education loan can not only fund your higher studies but also help save tax. The interest paid on the education loan can be claimed as deduction, as per Section 80E of the Income Tax Act, 1961.

Top 10 Things to Know:

The income tax benefit can only be claimed on interest part of the loan. The principal part does not qualify for tax benefit.

However, the entire interest part of the loans repaid can be deducted while calculating your taxable income. There is no upper limit for grant of deduction in respect of interest on loan for higher education. Also, there is no upper limit of the rate of interest which will be allowed as a deduction.

An individual can avail of tax benefit if he/she has taken an education loan to support higher studies of self, spouse, children or for the student of he/she is the legal guardian. So education loan taken for siblings or other relatives don't qualify for Section 80E benefit. 

Remember, deduction can be claimed by an individual only if the loan has been taken in his/her name.

This special deduction is also allowed even for education loan availed for study abroad. 

This tax deduction is allowed only if the education loan has been availed from any bank or notified financial institution or any approved charitable institution. So no deduction under Section 80E would be available if the education loan is taken from employer, family or friends.

Under the earlier provisions, the deduction on education loan was available only for pursuing full time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics.  However, the list has been expanded to even include vocational studies now. It now covers "all fields of studies (including vocational studies) pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so".  

The deduction on education can be claimed only when you start the repayment and is available up to eight years, or until the payment of interest in full, whichever is earlier. This means, if you repay the loan within, say, five years, you can claim deduction only till such period. 

Most education loans come with a moratorium period during which you opt not to service the loan. This period is usually until one year after the completion of the course or six months after the student gets a job, whichever is earlier. Accrued interest during the moratorium gets added to the principal and repayment in EMIs gets fixed. If you opt to pay interest during the moratorium period, it gets included while calculating the time limit of eight years. 

To avail tax benefits on education loan, inform your company's HR/accounts department so that less TDS is deducted from your salary. Else, you can claim it by filing tax returns.

source: www.profit.ndtv.com

Read More

Deductions of Higher Education Loan u/s. 80E for Asstt. Year 2014-15.

Section 80E allows deduction in respect of payment of interest on loan taken from any financial institution or any approved charitable institution for higher education for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or his children or the student for whom he is the legal guardian.

The deduction shall be allowed in computing the total income for the Financial year in which the employee starts paying the interest on the loan taken and immediately succeeding seven Financial years or until the Financial year in which the interest is paid in full by the employee, whichever is earlier.  For the purpose of this section -

• "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority section 10(23C), or an institution referred to in section 80G(2)(a);
• "financial institution" means a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;
• "higher education” means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

Read More

How to deduct Education Loan Interest?

A Salaried Employee or any any other Taxpayee (Individual Assessee) can get deduction in respect interest paid on Education Loan taken from the financial institution or Bank for pursuing higher education either for himself or for specified relatives.

As far as the deductibility of the interest amount is concerned, it may be noted that-

• The deduction is allowed in computing the taxable income of the initial assessment year (i.e., the assessment year in which the assessee starts paying the interest on the loan) and 7 year immediately succeeding assessment years ( or until the above interest is paid in full, whichever is earlier)
• No deduction is admissible towards Principal repayment.
• Interest has to be paid out of the income chargeable to tax.

Taxpayee can claim deduction towards the interest paid on education loan taken by him as a co-applicant and it can be paid any time during the financial year out of his/her income chargeable to tax.

Read More

Service Tax implemented Education Cess and Higher Education Cess as Income Tax w.e.f. 01.07.2012

As per new amendment Service Tax Department has been implement Education and Higher Education Cess as per Income Tax Department in Service Tax w.e.f 01.07.2012.  Thus the Service Tax Department also collect extra revenue as Education and Higher Education Cess from the Financial year 2012-13. But in this new rules there is no changes in Education Cess and Higher Education Cess which will attract the service tax as previous years. Finance ministery issued finance act which cleared all the aspects of Service Tax.

Download New Rule Education & Higher Education Cess of Service Tax Click Here.

Read More

Clarification regarding Children Education Allowance

Clarification regarding Children Education Allowance

Government of India
Ministry of Personnel, Public Grievances and Pensions
Department of Personnel and Training
No.12011/07(i)/2011-Estt.(AL)
New Delhi, 21st February, 2012

OFFICE MEMORANDUM

Subject:Children Education Allowance - Clarification.

The undersigned is directed to refer to Department of Personnel & Training’s O.M. No.12011/03/2008—Estt.(Allowance) dated 2nd September, 2008, and subsequent clarifications issued from time to time on the subject cited above, and to state that various Ministries / Departments have been seeking clarifications on various aspects of the Children Education Allowance / Hostel Subsidy. The doubts raised by various authorities are clarified as under:

S. No.	Point of reference/doubts	Clarification
1	What constitute “Fee” as per para 1(c) of the O.M. dated 2/9/2008 and whether fee paid for extra-curricular activities to some other institute and reimbursement of, school bags, pen/pencils. etc., can be allowed? Is there any item-wise ceiling?	“Fee’ shall mean fee paid to the school in which the child is studding, directly by the parents/guardian for the items mentioned in para 1(e) of the O.M.dated 2/9/2008. Reimbursement of school bags, pens/pencils, etc., may not he allowed. There is no item-wise ceiling.
2	Whether reimbursement can be allowed in case the original receipts are misplaced and duplicate receipts are produced by the Government servant?	In case of misplacement of receipts given by the school/institution towards charges received from the parents/guardian, reimbursement may be allowed if the Government servant produces a duplicate receipt, duly authenticated by the school authorities. Receipts from private parties, other than the school, if misplaced shall not be , entertained, even if a duplicate receipt is produced. Original receipts from school authorities need not be attested / countersigned stamped by the school authorities.
3	Whether the Government servant is allowed to get 50% of the total amount subject to the overall annual ceiling in the first quarter and the remaining amount in third and or fourth quarter?	Reimbursement of 50% of the entitled amount for the academic year could be allowed in the first and/or second quarter and the remaining amount could be reimbursed in the third and/or fourth quarter. However,the entire entitled amount can be reimbursed in the last quarter.
4	It is provided that whenever the DA increases by 50% the CEA will increase by 25%. What shall be the date of effect of such enhancement?	Any enhancement in the ceiling of reimbursement per annum due to increase in DA by 50%, shall be applicable on pro-rata basis from the date of increase in DA, subject to actual expenditure during the quarter.

Under signed sd/-

(Vibha G.Mishra)

Director

Read More

Deduction under section 80E in respect of interest on loan for higher education.

The amount in respect paid on loan borrowed from any financial institution or any approved charitable institution is eligible for deduction under Sec. 80E of the Income Tax Act, 1961, the loan being taken for the purpose of higher eduction.  There is no limit on the interest amount.  Deduction is allowed for initial year, i.e. when the individual starts making interest payment and immediately succeeding 7 years or until the interest is paid, whichever is earlier.  Deduction available only to Individual not to HUF or other type of Assessee.  The loan includes not only tuition or college fees but also other incidental expenses for pursuing such studies like hostel charges, transport charges etc.

Read More

Benefits of Education Loans and Other More Details.

According to the data available with Indian Banks' Association (IBA). The answer to this mystery lines in the loan amount. A large part of Bank's Education Loan accounts, around 62%, is under 4 Lakhs Amounts.

The policies are such that the meritorious students we cant really demand any security, they take Education Loan. Economic slowdown also has a role to pay. Sometimes, when students do not get the kind of job they are looking for, they prefere to wait for the right job with inevitably delays the repayment of loan.

Sometimes, sutdents just do not have the intention to pay back, opine bankers. With the problem banks have decided to approve the loan only after accessing their earning capacity rather than their family wealth.

Read More

How to get Loans for Professionals ?

Loans are something that is needed by most of us who are salaried or self employed at one point in time or the other. The list keeps going. Lets' take a look at one category of loans provided by banks - Loans for Professionals.

The bellow list are the different categories of documents that a self employed professionals has to fulfill:

1. Financial Documents
2. Tax information
3. Professional work

Here is a list of documents that a self employed professional may need to furnish:
* Proof of Identity (Passport copy/Voters ID Card/Driving License)
* Address Prof (Ration Card/Telephone, Electrical Bill / Passport)
* Bank statements (latest 6 months bank statement/passbook)
* Latest ITR alsong with computation of Income. Balance sheet and Profit and loss account for last 2 years certified by a CA.
* Qualification proof of the highest professional degree.
* Proff of continuation (Trade licence/Establishment Sales Tax Certificate)
and other mendatory documents.

The maxmium amount offered as Professional Loans varies in banks, depending on the financial standing of the customer, his repayment capacity, terure of the loan etc. Banks generally provided loan from Rs. 25000 to Rs. 25 lakhs. The interest rates vary only slightly from the normal lending rates of the banks.

Read More

Benefits of Higher Education Loan U/s. 80E while filing of Income Tax Annual Return.

It is most important to know that the Deductions u/s. 80E on Higher Education Loan as per Income Tax Act in respect of Repayment of Interest on Higher Education Loan, which is taken by the Taxpayee to their children for Higher Education. The conditions of deductions u/s. 80E are as follows:

1. In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relatives(spouse or children). In simple words deduction is available for Repayment of Interest on Loan .No deduction is available for deduction on repayment of principal.Further there is no upper limit under this section.
2. The deduction specified above shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to above is paid in full by the assessee , whichever is earlier.
   

What are the purpose?

• "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority under clause (2C) of section 10, or, an institution referred to in clause (a) of sub-section (2) of Section 80G.
• "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;
• "higher education" means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so;
  
• "initial assessment year" means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan.
• relative", in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.
  

Read More

Complete Education Loan Procedure of Various Nationalize Banks in India

Many Nationalize Banks of India provides its customers with a variety of personal banking services, which of them one is education loans to students aspiring to continue higher eduction or studies in India or through out the India. The Study Loans are sanctioned only to Indian Nationals.

As per the Bank's terms & conditions the Courses are Eligible for Education Loans:


A candidate, who applies for a program with prospects of employment, can apply for the loan. Whether you apply for a graduate, professional or postgraduate program or any other course sanctioned by UGC, AICTE or the government, you will be considered eligible for the loan.
Expenses taken into account:

* The student loan covers school, college or hostel fees as well as cost for buying books and other necessary items.
* Apart from the library, exam or library fees, even caution deposit, refundable deposit and building fund are considered for the loan.
* Other expenses, which are mandatory for completing the course, travel expense as well as a maximum cost of Rd 50,000 for buying a 2 wheeler, are taken into account.

Quantum of Loan & Security:


An applicant is sanctioned a loan of maximum Rs 10 lacs for studying in India and Rs 20 lacs for studying in abroad. On a loan above Rs 4 lacs, there is a margin of 5% and 15% for studying in India and abroad respectively.

* No security is required for loan amount upto Rs 4 lacs.
* A borrower should present a 3rd party as guarantee for a loan amount above Rs 4 lacs. However, on SBI discretion, this clause of 3rd party guarantee may be waived off in certain cases.
* If you borrow a loan amount above Rs 7.5 lacs, you need to offer a material collateral security and assign the future income of the student for paying installments.
* The guardians or parents of a borrowing student should secure an education loan.
* If the borrower is married, his or her spouse, parents-in-law or parents can act as the co-obligator.


Repayment of Education Loan:


The borrower can begin repaying 6 months after getting job or one year after the course is completed, whichever happens earlier. The loan can be repaid in a period of 5 to 7 years.

Education Loan for ISM students:


Education loans are also offered to the students of ISB. An ISB student can borrow upto 95% of costs. There is also a margin of 5% on the loan amount, which needs to be repaid in 7 years. For detailed information on this loan scheme for ISB students, you can contact the branch at Hyderabad University Campus Branch.

The following Banks are provide Study/Education Loan:

• Allahabad Bank
• Bank of Baroda
• Punjab National Bank
• Bank of India
• Bank of Maharashtra
• Bank of Rajasthan
• Federal Bank HDFC
• Bank IDBI
• Oriental Bank of Commerce
• Indian Overseas Bank
• Punjab and Sind Bank
• State Bank of India
• Syndicate Bank
• UCO Bank
• United Bank Of India
• United Western Bank
• Vijaya Bank
  

Read More