You might have filed your tax returns. However, you realize that you committed an error. You haven’t claimed education loan interest in your returns at all! Do not panic! You can revise your Income Tax Return Filing during the Assessment Year.
Under section 80E of Income Tax Act, Interest paid on Education Loan qualifies for deduction for a maximum period of eight consecutive years, commencing from the year in which the borrower start repaying or till the time interest is paid fully, whichever is earlier. This means, if you repay the entire loan amount by five years only, tax deduction would be allowed for five years rather than eight. MoneyMindz, India’s First Financial Advisory Portal India.
So, if you missed claiming deductions for interest repayment of Education Loan, you can claim it by filing a revised Income Tax Return for the Financial Year.
Moratorium Period comes along with Education Loan. Moratorium Period is that period immediately after the completion of the course for which the loan was taken. During that period, the student/borrower need not repay the loan or pay interest till the individual gets a job. This period usually lasts one year after the completion of studies, or six months after getting the job, whichever is earlier. Tax Benefits can be claimed only on the interest instead of the principle. India’s First Oncall Financial Advisory Portal, Kuber Mindz
If a parent takes an education loan for his/her child and repays it on his/her own, tax deduction can be claimed. If, however, the student repays the loan from his/her own source of income after commencing earning, neither the parent nor the offspring can claim tax deductions as the loan would be in the parents name but repayment isn’t made out of the parents taxable income. Get Personalized Advice On Education Loan From Kuber Mindz
So, if the loan is taken by the parent, he/she can claim deduction for the interest compound repaid, only if his/her income is taxable. But if the EMI is shared by the parent and the offspring, the parent can claim deduction up to the share of EMI paid by him/her. Neither the parent nor the offspring can claim deduction for the interest share paid by the offspring.
Moreover, not all Education Loans are acceptable for tax deductions. It is indicated in Section 80E that only loans from certain Financial Institutions and banks are entitled for exemptions. Your best bet would be to verify if your lender (Education Loan lender) involved in the list.
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