new Delhi. The cost of higher education of children is increasing every year. To meet its needs, most parents need an education loan. This loan will not only fulfill the dream of studies, but will also get the benefit of tax exemption in many ways.
Parents often wonder from where the money will come when the child goes for higher education. He denies the talk of education loan. Even if a guardian takes an education loan, he is not aware of some tax exemptions available on it. Today you will know how education loan gives tax exemption.
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also get the benefit of moratorium
According to the information received from BankBazaar, before taking education loan for any course, banks check the authenticity of the institution (college). The loan amount is decided based on the repayment capacity of the loan. Banks ask for collateral security in lieu of this loan if the amount exceeds Rs 7.5 lakh and also makes the guardian a co-applicant for the loan. Moratorium is given on this loan for 6-12 months after the duration of the course.
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tax exemption to parents
During this, although there is exemption from loan repayment, but normal interest is charged. After the moratorium is over, the EMI is fixed by adding the interest to the original loan. If the guardian pays simple interest during the moratorium period, then he will get tax exemption on this amount.
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no exemption limit
There is an unlimited benefit of tax deduction on interest on education loan. The tax exemption claim starts from the year in which the loan repayment starts. Its benefit is available for the next 7 years. That is, you can take tax exemption for a total of 8 years.
understand this assessment
Tax exemption is available on education loan of two children together. If a loan of 25-25 lakhs is taken for two children at 10 percent interest rate, then the annual interest of Rs 50 lakh will have to be paid at Rs 5 lakh. Tax exemption will be given on this entire amount.
Be careful while applying
Tax expert Atul Garg says that the maximum benefit of tax exemption is available on education loan. However, the interest rate, processing fee and other costs should be carefully considered before taking a loan. If you do the repayment of the loan on time, then your CIBIL will be better and it will be easier to get home or car loan in future.
Tax relief to the student after the completion of the course
During the moratorium, the guardian gets a discount on the interest payment, while after getting the job, if the student repays the loan, then he starts getting the benefit of the exemption. Someone took an education loan of 20 lakhs and the duration of the course is 4 years. If the loan repayment starts after one year, then the guardian will get tax relief for the first 5 years. On getting the job, the student will get tax exemption during the entire tenure of the loan.
Tags: Education Loan, Income tax exemption
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