H&R Block – Tax Benefits on Education Loan (Section 80E) and Home Loan (Section 24) Interests - H&R Block| Blog

H&R Block – Tax Benefits on Education Loan (Section 80E) and Home Loan (Section 24) Interests

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H&R Block – Tax Benefits on Education Loan (Section 80E) and Home Loan (Section 24) Interests

Have you been looking to ease the tax burden, especially when a wholesome pie of your salary is eaten by loan equated monthly installments? There is some relief on taxes offered by limitless deduction available on select loan interests paid by you.

Yes, you read it right! There are two such loans where the entire interest paid can be claimed for deduction, provided you satisfy the ground rules if you are an individual tax payer.

Education loan:

The rising cost of higher education is forcing people to borrow money to pay the fees of their children’s professional courses.

If you have been servicing an education loan taken for higher education then you can claim a tax waiver for that part of your income equivalent to the entire interest paid by you as part of loan each year under Section 80E.

This deduction was available only to the borrower in the past. But now if your spouse or children or minor (with you as guardian) have taken the loan serviced by you then too you are allowed to claim the deduction. Apart from these dependents, you cannot claim the deduction for any other relatives such as siblings, cousins etc.

Another reason to be elated is that not just regular courses, but loans taken for vocational courses too are available for the limitless interest deduction. You can claim deduction for the interest paid for up to eight successive years, counted from first interest payment.

However, loans taken from employers, relatives, friends or other individuals do not fit the bill. You need to take the loan from a recognized financial institution or an approved charitable trust.

So far no distinction has been made on whether the education loan is sought for studies in India or abroad. Cite this tax benefit and make your parents or spouse smile, the next time you mention education loan.

Home loan:

Has the enhancement of home loan interest deduction to Rs 2 lakh from the earlier Rs 1.5 lakh (financial year 2014-15 onwards) left you gasping for more? Well you can analyse whether you meet some of the conditions where you can claim any amount of interest paid on home loan.

Understand that the limit of Rs 2 lakh on interest deduction for home loan is applicable only when the property is self-occupied. If the property on which you are claiming deduction is let out then the restrictions of Rs 2 lakh are removed, as per Section 24.

So, if you own two houses, where one remains vacant and the other is self-occupied then a notional rental income is assumed from the vacant flat even though you actually do not earn any rent. Though you need to consider the rental income as taxable, the added benefit is that the interest paid for the home loans, irrespective of any ceilings can be claimed for tax deduction against the rentals.
Make sure you claim this deduction only on properties that you have already got the possession.

You can cheer these two no-limit interest deductions only if you file returns in your capacity as an individual tax payer and not HUF or others.

About Author/ Resource Box:

H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for filing their Income Tax Online.

HRBlockIndia
HRBlockIndia
H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for filing their Income Tax Online.

1 Comment

  1. Ganesh says:

    Hello,

    If I am taking top-up on existing Home Loan to pay for my PG education, am I eligible to get 80E deduction on the interest paid for the top-up loan?

    Thanks.

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