Education is crucial. You can do so many things with education ranging from getting employed to starting your own business, ranging from creating something unique and innovative to doing research. It improves the quality of society and its people. However, education is becoming costlier year by year. Hence the government’s intention is to give relief to taxpayers by permitting them tax reliefs under this prospect.
1. Interest paid on education loan and its tax benefits
For purpose of higher education, if you take a loan, you can avail tax benefit in respect of interest paid under Section 80E. Any educational course you undertake after completion of Senior Secondary Examination is Higher education for the purpose of claiming interest. You can claim this benefit for yourself, your wife and/or children for eight years in a row from the year in which the payment interest begins. This deduction is under the basis of payment. No restrictions are there as to the quantum of deduction and the course for which you took the loan is taken either part time or full time. You can avail this loan from any financial institution like banks or approved charitable institution. You aren’t entitled to this loan if you borrow from friends or relatives for education.
2. Tuition fee payment
For full-time education of a maximum of two of your children, the tax laws permit a deduction of Rs 1.50 Lakh per year. The education can be had in any school, college, university or any educational institution. But payments made for coaching classes are exempt. The eligibility fee paid can be claimed whether the children are dependent on you. This deduction up to Rs 1.50 covers only the tuition fee and not any donation or development.
3. Exempt allowance for salaried people
For salaried and self-employed people, in addition to what has mentioned above, the tax laws also give absolute allowance received by an employee from his employer as fully exempt. The first exempt allowance is education allowance up to Rs 100 for each of your two children. The second allowance is hostel allowance at Rs 300 per child for two children. This allowance shall be seen as exempt only if you have incurred expenses against allowance from your employer.
The government seems to actively promote education in our country and this is a great step ahead.
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