Education is a vital investment, but it can come with significant financial costs. To ease this burden, the government offers tax benefits on education loans that help borrowers save on taxes while repaying their loan.
Vizzve Finance explains how you can claim these benefits, eligibility criteria, and important tips to maximize your tax savings.
What Are Education Loan Tax Benefits?
Under Section 80E of the Income Tax Act, you can claim a deduction on the interest paid on an education loan for higher studies. This deduction helps reduce your taxable income, ultimately lowering your tax liability.
Eligibility Criteria
The loan must be taken from a recognized financial institution or approved charitable trust.
The loan should be for higher education for self, spouse, or children.
Deduction is available for interest paid, not the principal amount.
The maximum deduction period is 8 years from the year you start repaying the loan.
How to Claim Education Loan Tax Benefits
Collect Payment Receipts: Keep all interest payment statements from your lender.
File Income Tax Return (ITR): Report the interest paid under Section 80E while filing your ITR.
Maintain Documentation: Preserve loan agreements, payment receipts, and bank statements for proof.
Consult a Tax Professional: For complex cases, get expert advice to maximize benefits.
Benefits of Education Loan Tax Deductions
Reduces taxable income, saving you money each year.
Encourages timely repayment by easing financial burden.
Helps you invest in quality education without excessive tax worries.
Common Myths About Education Loan Tax Benefits
Myth: The principal repayment qualifies for tax deduction.
Fact: Only interest paid is eligible for deduction.
Myth: Deduction is available only for loans taken for self.
Fact: Deduction also applies for spouse and children’s education loans.
How Vizzve Finance Supports Your Education Loan Journey
Vizzve Finance offers education loans with competitive interest rates and transparent terms. We also guide you on claiming tax benefits and managing your loan repayment efficiently.
FAQs
Q1. Can I claim tax benefits if my loan is from a non-banking lender?
No, the loan must be from a recognized financial institution or approved trust.
Q2. Is there a limit on the amount of interest eligible for deduction?
No limit, you can claim the entire interest paid during the financial year.
Q3. Can I claim tax benefits if I am repaying a parent’s education loan?
No, the loan must be in your name or for your spouse or children.
Q4. How long can I claim the education loan interest deduction?
For up to 8 years from the year you start repaying the loan.
Published on : 10th August
Published by : SMITA
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