What Is Eligible For Deduction In An Education Loan?

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What Is Eligible For Deduction In An Education Loan
A deduction can be claimed only on the interest component of an educational loan. Only those loans availed from recognised financial institutions and charitable organisations are eligible for a tax deduction. Loans obtained from friends or relatives are not eligible for seeking a deduction under this section.
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What is allowed as deduction under Section 80E?

Section 80E of Income Tax Act The education industry in India is reportedly estimated to reach US$ 144 billion by 2020 1, The sector has constantly managed to push the importance of pursuing basic and higher education for economic development. Demographically India has the advantage of having one of the largest youth populations, coupled with widespread educational institutes and schools, and hence educational expenses naturally become one of the liabilities one has to account for.

With the growth of the Indian economy and rise in income levels, the spending on education has increased too, that accounts for the second-highest share of wallets for middle-class households in the country. The spending for pursuing education can let you save on income taxes *, You can claim a deduction of Interest paid on a loan taken for pursuing higher education from taxable * income under Section 80E of the Income Tax Act, 1961 *,

According to Section 80E *, the deduction is allowed on the total interest amount of the EMI paid during the financial year. The loan has to be taken from a bank or financial institution to pursue higher studies. One needs to obtain a certificate from the bank wherein the principal and interest amounts of the education loan paid during the financial year should be mentioned separately.

It is because no deduction is allowed on the principal repayment amount. The interest amount paid during the financial year is allowable as a deduction from taxable * income. There is no limit on the deduction amount. The benefit of the deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

It is applicable even when you have taken an education loan for your spouse, children or for a student for whom you are the legal guardian. It is advisable to wind up the higher education loan within the next 8 years to get the maximum benefit of Section 80E *,

  • Parents can make use of this section to give their children the best of opportunities in higher education and secure their careers too.
  • If they wish to send their children for foreign studies and take a loan for financing it, can also claim the deduction under Section 80E *,
  • The deduction is applicable to all courses pursued after the senior secondary examination or equivalent and it should be from a school/institute/university recognised by the government.

Let us look at one example to know how Section 80E * deduction helped Shivam. Shivam is a regular salaried IT executive living in Mumbai with his family. His 19-year-old son, Aman is ready to pursue engineering from one of the reputed colleges in the country.

Shivam took an education loan of ₹ 10 lakh to fund Aman’s college fees for 4 years. Aman is comfortably studying in his college with a secured career to look forward to. Shivam has taken the loan for a period of 6 years, and in this duration, he can claim a deduction of Interest paid on the loan taken for higher education under Section 80E *,

An education loan indirectly supports career-building by financing the crucial years of education. If you have taken an education loan and are in the process of repaying the same, then avail the Tax * benefit of Section 80E *, This way you can save some money while moving towards a successful career ahead.

Any individual applying for a loan for further studies or higher education for himself or on behalf of their spouse, children or student for whom the individual is the legal guardian Companies and Hindu Undivided Family (HUF) cannot claim a deduction Only the taxpayer who has applied for the loan can claim a deduction

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Can I claim both 80C and 80E?

Section 80E: Income Tax Benefits on Education Loan with Sec 80E Mediclaim Plans starting @ Rs 250* / month I hereby authorize Coverfox to communicate with me on the given number for my Insurance needs. I am aware that this authorization will override my registry under NDNC. Given the rising cost of higher studies, we end up spending a considerable amount of savings to meet the same. If you intend to take a loan for pursuing higher studies in India or abroad, you can claim a deduction under section 80E of the Income Tax Act 1961, which caters specifically to educational loans. To elaborate further, an education loan taken on behalf of your spouse, children, adopted children, student for whom the taxpayer is the legal guardian are applicable for deduction under section 80E. Section 80E also mentions that this loan must be taken from a financial or charitable institution.

  • Deduction under section 80E cannot be availed towards the interest paid to a relative or employer towards loan taken for higher education.
  • A financial institution refers to any bank operating as per the Banking Regulation Act, 1949 and is in the capacity to provide such a service.
  • A charitable institution is any mentioned authority under the clause of 23C of Section 10.

It can include any university or educational institution established solely for educational purpose, trusts or institutions established for charitable or religious purpose, institutions referred to under Section 80G. Note: This deduction is applicable only for individuals. Any individual who has applied for a loan for higher education can avail the benefits of tax saving provided by Section 80E of the Income Tax Act, 1961. Even if an individual has availed the maximum available deduction of INR.1,50,000 under section 80C, they can still avail deduction under Section 80E.

Only individuals are eligible for tax deductions, Hindu undivided families (HUF) and companies cannot avail deductions under this section. Also, loans taken from friends or relatives are not eligible under this section. Deduction can be claimed only on the interest component. The benefit can be claimed by the parent as well as the child, which means that the person who pays the education loan whether parent or child can start claiming this deduction. Deduction can be availed only if the loan is taken to finance higher education. Deduction can be availed only for 8 years. You cannot claim for deductions beyond 8 years. Deduction can be availed only if the loan is taken under the name of person liable to pay taxes.

The deduction amount under Section 80E is only the interest paid on the loan taken for higher studies. This amount has no upper limit, you can get tax benefit on the entire amount of interest paid but not on the principal amount. (Deduction under Section 80E can be availed irrespective of the amount of loan which can range from INR 1 lac to INR 20 lacs or even more).

  1. The deduction under section 80E is allowed only if the education loan was taken for higher studies.
  2. Higher studies refers to education after completing the Senior Secondary Examination (SSE).
  3. It includes both the vocational courses as well as the regular courses in India or abroad.
  4. Thus, loan taken for post graduate courses in medicine, management, engineering, applied science, etc.

are covered under Section 80E. The deduction under section 80E can be claimed from the year in which you start paying interest on loan for higher education. If you have started paying interest within the same year of borrowing, then you can claim deduction for the payment of interest on this loan. Who can claim 80E deduction? Any individual who has applied for a loan for higher education can avail the benefits of tax saving provided by Section 80E of the Income Tax Act, 1961. An education loan taken on behalf of your spouse, children, adopted children, student for whom the assessee is the legal guardian are applicable for deduction under section 80E.

From where the loan should be taken? Deduction can be claimed only if the loan is taken under the name of taxpayer and from a charitable or financial institution. A financial institution refers to any bank operating as per the Banking Regulation Act, 1949 and is in the capacity to provide such a service.

A charitable institution is any mentioned authority under the clause of 23C of Section 10. It can include any university or educational institution established solely for education purpose, trusts or institutions established for charitable or religious purpose, institutions referred under Section 80G.

  1. What is a qualified loan? A qualified loan is a category of loans that have certain, more stable features that help make it more likely that you’ll be able to afford your loan.
  2. If a bank loans you a qualified loan, it means that the bank has met certain requirements and it is assumed that the bank followed the ability-to-repay rule.

What is Section 80E in income tax? The interest paid on the education loan can be claimed as deduction, as per Section 80E of the Income Tax Act of India, 1961. How much deduction is allowed under 80E? The deduction amount under Section 80E is only the interest paid on the loan taken for higher studies.
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What is the maximum limit for 80E?

A maximum deduction of up to Rs.40,000 can be availed under Section 80E. While availing deduction under section 80E, the taxpayer must obtain a certificate from the bank from which the loan was availed providing details of principal and interest portion of the education loan paid during the financial year.
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Which loan amount is eligible for deduction?

Home Loan Interest Deduction – Section 80EE allows income tax benefits on the interest portion of the residential house property loan availed from any financial institution. You can claim a Home Loan Interest Deduction of up to Rs.50,000 per financial year as per this section.

  1. You can continue to claim until you have fully repaid the loan.
  2. The deduction under 80EE is applicable only to individuals which means that if you are a HUF, AOP, a company, or any other kind of taxpayer, you cannot claim the benefit under this section.
  3. To claim this deduction, you should not own any other house property on the date of the sanction of a loan from a financial institution.
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In case of a home loan taken jointly, both borrowers can enjoy tax benefits on his/ her taxable income individually. This includes a maximum of Rs.2 lakh on the interest paid and up to Rs.1.5 lakh on the principal amount. Any family member, friend or even the spouse can be a co-borrower of a from Bajaj Finserv.

  • The only condition is that every applicant of the housing loan must be a co-owner of that residential property.
  • If you take a second home loan to purchase another property, tax benefits are applicable on the interest paid.
  • Here, you can claim the entire interest amount paid as no cap is applied.
  • Currently, individuals can claim only one property as self-occupied and make tax payments on the other based on notional rent.

According to the latest Union Budget of India, a proposal has been put forward stating that an individual can claim a second home as self-occupied property. This aims to help borrowers save more in the form of taxes. The process to claim tax benefits on a home loan is easy and simple.

Make sure the residential property is in your name. In case of a joint home loan, ensure you are the house’s co-owner Calculate the total amount you can claim as a tax deduction Hand over the home loan interest certificate to your employer for adjusting the TDS If you fail to follow this step, file your IT returns

Self-employed borrowers need not submit these documents. However, they must keep these handy if a query arises in the future. The maximum tax deductible for a home loan is listed below under specified sections of the Income Tax Act 1961.

Up to Rs.2 lakh u/s 24 for self-occupied house; no limit for non-self-occupied house Up to Rs.1.5 lakh u/s 80C Up to Rs.1.5 lakh u/s 80EEA for first-time home buyers

A person who has purchased a new house for self-occupation or to rent out can claim tax exemption on home loans u/s 24, 80C and 80EEA of the Income Tax Act, 1961. You can also claim tax benefits if you are a co-owner of the house or a co-borrower. Yes, you can claim home loan tax benefits for a property under construction u/s 80C. The following rules apply for such deduction.

If the construction is completed within 5 years, a deduction of Rs.2 lakh is applicable For constructions not completed within 5 years, only up to Rs.30,000 is deductible

Premiums paid for a home loan protection insurance plan are tax deductible under section 80C of the Income Tax Act, 1961 only if the borrower makes repayment. Under specific circumstances, where the lender finances such an insurance plan and the borrower repays via loan EMIs, deductions are not allowed. A home loan top-up is eligible for tax deduction u/s 24(b) and 80C only if it is used for:

Acquisition/ construction of a residential property Renovation or repair of such property

Such a claim should also be backed up with valid receipts and documents. An is one of the best tools to compute the tax benefits without any hassle. It is an online tool that instantly calculates the amount based on certain home loan details. Some of these include home loan amount, rate of interest, existing tax deductions, and gross annual salary.

Simply enter the details required and check the tax benefits you can avail. Yes, on 1st February, 2021, in the Union Budget 2021 government extended the additional tax deduction of Rs.1.5 lakh on interest paid on home loan for the purchase of affordable homes until March 31, 2022. Purchasing a property is a significant investment decision.

To avail the most competitive along with other benefits, approach Bajaj Finserv. The maximum housing loan tax benefit is Rs.1.5 lakh on principal payment. Here, claims can include registration charges or stamp duty as well. As per Section 80, EEA, and the government initiative of ‘Housing for All,’ home loan interest deductions were allowed, starting from the year 2021 or FY 2021-22.

  • From April 2022, new income tax rules apply: First-time home buyers will not be eligible to receive tax benefits under Section 80 EEA on new housing loans sanctioned in FY23 as the special benefits announced in Budget 2019 expired on March 31, 2022.
  • If an applicant satisfies the requirements of both Sections 80EE and 24 of the I-T Act, they must first exhaust the limit under Section 24, then claim benefits of home loan interest deduction under Section 80EE.

Joint home loan borrowers can claim individual home loan rebates in income tax up to Rs.2 lakh on interest paid and Rs.1.5 lakh on the principal amount. : Home Loan Tax Benefit 2022: Know The Income Tax Benefits on House Loan
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What is 80EE and 80EEA?

As per the Section 80EEA income tax act, any first-time home buyer in India can earn an additional tax deduction of up to Rs.1.5 lakh. While buying a property that is affordable and needs the support of a home loan, buyers can get benefits and deductions under two Sections, i.e.80EE and 80EEA deductions.
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Who is eligible for 80EE exemption?

Section 80EE: Income Tax Deduction on Home Loan Interest U/S 80EE Mediclaim Plans Starting @ Rs 8* / Day I hereby authorize Coverfox to communicate with me on the given number for my Insurance needs. I am aware that this authorization will override my registry under NDNC. Tax deduction under Section 80EE of the Income Tax Act 1961, can be claimed by first-time home buyers for the amount they pay as interest on home loan. The maximum deduction that can be claimed under this section is Rs.50,000 during a financial year. The amount can be claimed over and beyond the deduction of Section 24 and, which are Rs.2,00,000 and Rs.1,50,000, respectively. The conditions associated with claiming deductions under Section 80EE are :

This must be the first house that the taxpayer has purchased. he value of the house should be Rs.50 lakhs or less. The home loan availed should be Rs.35 lakhs or less. Section 80EE allows deduction only for the interest portion of a home loan. The home loan has been sanctioned by a Housing Finance Company or a Financial Institution. As on the date of the loan sanction, the individual must not be owning another house. The loan should not have been availed for commercial properties. For claiming deductions under this section, the loan should have been sanctioned between 01.04.16 to 31.03.17.

To become eligible for claiming 80EE deductions, a taxpayer has to make sure of the following :

Only individual taxpayers can claim deduction under Section 80EE on properties purchased either singly or jointly. If an individual has bought a property jointly with his or her spouse and they are both paying the instalments of the loan, then the two can individually claim this deduction. e tax benefits are not applicable for Hindu Unified Families (HUF), Association of Persons (AOP), companies, trusts, etc. Tax benefits under Section 80EE can only be claimed by first-time home buyers. In order to claim this deduction, the individual must have taken the loan from a financial institution for buying his/her first residential house property. Section 80EE is applicable on a per person basis rather than a per property basis. To claim this benefit, it is not necessary for the taxpayer to reside in the property for which he or she is claiming this deduction. Borrowers living in rented homes can also claim this deduction.

A taxpayer can claim deduction under Section 80EE at the time of, To find out how much one can claim as deduction, here is what needs to be done :

Calculate the total amount of interest that is paid during a financial year on the home loan. Once the total interest amount paid is ascertained, claim deduction up to Rs.2,00,000 (under Section 24 of Income Tax Act, 1961). The balance amount, up to Rs.50,000, can be claimed under Section 80EE of Income Tax Act, 1961.

The features of Section 80EE are as under :

The deduction under Section 80EE can only be claimed by individual taxpayers on properties purchased either singly or jointly. It is not applicable for Hindu Unified Families (HUF), Association of Persons (AOP), companies, trusts, etc. The maximum deduction that can be claimed under this section is Rs.50,000 during a financial year. The deduction that can be claimed is above and beyond the limit of Rs.2,00,000, as under Section 24 of the Income Tax Act. The property can be either self-occupied or non-self-occupied.

Deduction can be claimed for interest on home loan under Section 24 of the Income Tax Act, 1961. The limit under this section is Rs.2,00,000. This deduction can only be claimed if the owner or his or her family members reside in the house property. The entire interest shall be waived off as a deduction in case the house is on rent. deduction under Section 80EE of the Income Tax Act, 1961 can be claimed by first-time home buyers for the amount they pay as interest on home loan. The maximum deduction that can be claimed under this section is Rs.50,000 during a financial year. The amount can be claimed over and beyond the deduction of Section 24 and Section 80C, which are Rs.2,00,000 and Rs.1,50,000, respectively.

When was Section 80EE first introduced? Section 80EE was designed for the first time in the FY 2013-14 for individual taxpayers to avail tax deduction on interest on home loans. At that time, the maximum deduction that could be claimed was Rs.1,00,000. This tax benefit was available for only two years – FY 2013-14 and FY 2014-15.

The Section was reintroduced on FY 2016-17, and the quantum of deduction was changed to Rs.50,000 for interest paid towards home loan. What is the maximum amount that can be claimed as deductions u/s 80EE? The maximum deduction that can be claimed under this section is Rs.50,000 during a financial year.

  • The amount can be claimed over and beyond the deduction of Section 24 and Section 80C, which are Rs.2,00,000 and Rs.1,50,000, respectively.
  • I didn’t claim the deductions for FY 2016-17 even though I purchased a new property in August 2016.
  • Can I claim the deduction now? No, the deduction could only have been claimed the latest by the end of FY 2016-17, i.e.

by 31st March 2017. What are the conditions associated with claiming deduction under Section 80EE? The following are the conditions that need to be noted to claim deduction under Section 80EE :

This must be the first house that the taxpayer has purchased. The value of the house should be Rs.50 lakhs or less. The home loan availed should be Rs.35 lakhs or less. The home loan has been sanctioned by a Housing Finance Company or a Financial Institution. As on the date of the loan sanction, the individual must not be owning another house.

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Who is eligible to avail tax benefits under Section 80EE? Only individual taxpayers can claim deduction under Section 80EE on properties purchased either singly or jointly. The tax benefits are not applicable for Hindu Unified Families (HUF), Association of Persons (AOP), companies, trusts, etc.

Calculate the total amount of interest that is paid during a financial year on home loan Once the total interest amount paid is ascertained, claim deduction up to Rs.2,00,000 (under Section 24 of Income Tax Act, 1961). The balance amount, up to Rs.50,000, can be claimed under Section 80EE of Income Tax Act.

What are the features of Section 80EE? The features of Section 80EE are as under :

The deduction under Section 80EE can only be claimed by individual taxpayers on properties purchased either singly or jointly. It is not applicable for Hindu Unified Families (HUF), Association of Persons (AOP), companies, trusts, etc. The maximum deduction that can be claimed under this section is Rs.50,000 during a financial year. The deduction that can be claimed is above and beyond the limit of Rs.2,00,000, as per Section 24 of the Income Tax Act, 1961. The property can be either self-occupied or non-self-occupied.

How is Section 80EE different from Section 24? Deduction can be claimed for interest on home loan under Section 24 of the Income Tax Act, 1961. The limit under this section is Rs.2,00,000. This deduction can only be claimed if the owner or his or her family members reside in the house property.

  • If one is able to meet the conditions of both the sections i.e.
  • Section 24 and Section 80EE, the individual can avail benefits under the two.
  • To do so, the individual will first need to exhaust the limit under Section 24 and then claim the additional benefit under Section 80EE.
  • Therefore, the deduction under Section 80EE is in addition to the limit of Rs.2,00,000 as under Section 24.

: Section 80EE: Income Tax Deduction on Home Loan Interest U/S 80EE
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Is there any tax benefit on education loan?

An education loan helps you not only finance your foreign studies but it can save you a lot of tax as well. If you have taken an education loan and are repaying the same, then the interest paid on that education loan is allowed as a deduction from the total income under Section 80E.
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What if I declare more than 1.5 lakh in 80C?

Hello, Following is my portfolio under secion 80 c: 1. investment of 1.5 lakhs in ppf 2. investment of 1.5 lakhs in sukanya samridhi yojana 3. investment of 50 thousand in lic 4. investment of 50 thousand in EPF 5. kid’s tuition fee of 48 thousand It is obvious from above that my investment is much more than the eligible amount under section 80c but i am claiming only 1.5 lakhs under 80c.

  1. Now, i came to know from my friends that since i am investing more than the permissible amount under section 80c, so income tax department can deny to provide the interest on any/all of my investments at the time of maturity.
  2. And my friends even told me that the income tax officials will return me the principal amount only after maturity.

Is it so? I tried to ask this question from almost from everybody i could think of that they can answer but nobody seems to be having 100% surety on their responses. Please provide me the plausible response! Asked 6 years ago in Income Tax Dear sir, Dept. CA, Ahmedabad 848 Answers 34 Consultations

Talk to Vishrut Rajesh Shah

Dear Sir, You are partially correct in the sense you will not get deduction of more than 1.5 lacs. However, rest assured, Income tax department cannot restrict your interest. You will get your principal plus interest at the time of maturity. Please feel free to call/ revert in case of any doubts Thanks and Regards Abhishek Dugar CA CS B.Com CA, Mumbai 3576 Answers 183 Consultations

Talk to Abhishek Dugar

Hi, that is not true. but yes, there are few investment in which there is lock in period and if investment is not kept till lock in period then those investments have to be reserved in the year in which it is revoked. For example- House loan – lock in period is 5 years that is the house on which loan is taken, period of holding of that house should not be less then is 5 years PPF- it is 15 years/ 6 years Life insurance premium- Deduction is restricted to 20% of capital sum assured in respect of policies issued on or before 31-3-2012 and 10% in case of policies issued on or after 1-4-2012.

Many more are there, for that you can visit the link given below: http://www.simpletaxindia.net/2008/02/saving-under-80c-whose-name-can-be-done.html#axzz4aY5XH1gT but as i see- the investment made by you doesnt not have that impact as your investments in sukaniya, epf and tutuion fees covered Rs 1.5 lakhs.

so dont worry. CA, Bangalore 448 Answers 85 Consultations

Talk to Vishakha Agarwal

The investments eligible for deduction u/s 80C are not made with the Income Tax Department but with the respective agencies like PF,Bank,LIC.etc. Hence, the question of non-payment of interest does not arise. If the investment made by you, on which you claimed deduction u/s 80C, are withdrawn before the lock in period, then the deduction allowed and taxed as income in the year such investments are withdrawn. CA, Hyderabad 974 Answers 124 Consultations

Talk to B Vijaya Kumar

Hi, Your first contention is correct. You can calim only Rs.1.5 Lakhs as deduction u/s 80C. Regarding second point, you are investing the amount with respective Banks/Post Offices/Insurance Companies and not with IT Dept. When you are not investing the money with IT Dept, how can IT Dept officials withhold your Interest. CA, Bengaluru 542 Answers 94 Consultations

Talk to Pradeep Bhat

Thanks a lot for your responses ! Fine. I got that. Now i have one more question: – i am investing 1.5 lakhs in my ppf and 1.5 in my daughter’s ppf account (i am the guardian of her ppf account) and also depositing 1.5 lakhs on her sukanya samridhi account.

Will it be an issue ? Can i cause trouble, specially the ppf amount as total ppf contribution (for my ppf and my daughter’s ppf combined) is 3 lakhs ? Asked 6 years ago Yeah, depositing an amount of more than 1.5 lacs in PPF (your plus your daughter) could be an issue and your interest may be denied on excessive amount.

Don’t deposit more than 1.5 lacs in PPF. Thanks and Regards Abhishek Dugar CA CS B.Com CA, Mumbai 3576 Answers 183 Consultations

Talk to Abhishek Dugar

Hi, This will not be an issue. PPF Contribution is restricted to Rs.1.5 Lakh per account in one FY. So, there is no issue if you invest 1.5 Lakh in yours as well as your daugher’s PPF Account. CA, Bengaluru 542 Answers 94 Consultations

Talk to Pradeep Bhat

Dear sir, Find below reply – – No problem at all The limit of ppf investment is per account. Since your and your minor daughter accounts are seperate one there will be no issue. CA, Ahmedabad 848 Answers 34 Consultations

Talk to Vishrut Rajesh Shah

No issues until you can prove that you have source. CA, Hyderabad 1408 Answers 164 Consultations

Talk to Shyam Sunder Modani

Your total investment upto 1.5 lakhs will only be allowed as deduction u/s 80C. The additional contributions do not have any problem from tax point of view, except that you cannot claim deduction u/s 80C on them. CA, Hyderabad 974 Answers 124 Consultations

Talk to B Vijaya Kumar

no, it is not. As you can not claim deduction for the amount you have invested in your daughter’s PPF account. If whatever money has been invested if from accounted money on which you have already paid tax. There will be no issue, as the money can be utlised and invested by taxpayer once they are declared and taxes are paid. CA, Bangalore 448 Answers 85 Consultations

Talk to Vishakha Agarwal

Hello Sir, There is nothing to worry about and you can very well deposit in both the PPF as well as the Sukanya Samridhi scheme. Trust this clarifies your query. Feel free to call / get back in case of further clarifications. Thanking You. Regards, Rohit R Sharma BCOM, ACA, LLB-GEN, CERT. FAFP CA, Mumbai 2104 Answers 95 Consultations

Talk to Rohit R Sharma

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What is the maximum deduction for student loan interest?

Student Loan Interest Deduction This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
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Can parents claim 80E deduction?

Eligibility to Get Tax Deduction under Section 80E of the Income Tax Act, 1961 – The eligibility criteria to get income tax deduction under section 80E of the Income Tax Act, 1961 are:

This tax deduction can be availed by only individuals but companies and Hindu undivided families (HUF) cannot avail the tax exemption under 80E. In addition to this, the loans that one takes from relatives and friends cannot avail the benefit under this section of the Income Tax Act. One can claim the Section 80E Income Tax Deduction only for the interest that one pays against the education loan taken. The benefit of this deduction can be availed by both parent and child. This means the person who is repaying the education loan, whether child or parent, can claim the deduction. The deduction is available only against the loan that is taken for higher education. The Income Tax exemption under Section 80E can be availed only by the person under whose name the loan is taken and is liable to pay the taxes.

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Can we claim 80EE every year?

Q – Can I claim a tax benefit under both section 24 and section 80EE in a single year? I bought my first house last year. – Yes, You can claim a tax benefit under both section 24 and section 80EE in a single year. Tax deduction under Section 80EE of the Income Tax Act 1961, can be claimed by first-time home buyers for the amount they pay as interest on home loan.
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How much education expense can I claim?

American opportunity credit – How it works: You can lower your tax bill by up to $2,500 if you paid that much in undergraduate education expenses last year. The American opportunity tax credit lets you claim all of the first $2,000 you spent on tuition, school fees and books or supplies needed for coursework — but not living expenses or transportation — plus 25% of the next $2,000, for a total of $2,500.

  1. Who can claim it: The American opportunity credit is specifically for undergraduate college students and their parents.
  2. You can claim the credit on your taxes for a maximum of four years.
  3. Your parents will claim the credit if they paid for your education expenses, and you’re listed as a dependent on their return.
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You can get the full education tax credit if your modified adjusted gross income, or MAGI, was $80,000 or less in 2021 ($160,000 or less if you file your taxes jointly with a spouse). If your MAGI was between $80,000 and $90,000 ($160,000 and $180,000 for joint filers), you’ll end up with a reduced credit.

If you earn more than that, you can’t claim this credit. What it’s worth: The American opportunity credit cuts the amount of taxes you pay. If you owe $3,000 in taxes and get the full $2,500 credit, for example, you’ll have to pay only $500 to the IRS. Is the American opportunity credit refundable? Yes.

You can still receive 40% of the American opportunity tax credit’s value — up to $1,000 — even if you earned no income last year or owe no tax. For example, if you qualified for a refund, this credit could increase the amount you’d receive by up to $1,000.
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Which is eligible for 100% deduction?

(D) Donations U/s 80G to the following are eligible for 50% Deduction subject to Qualifying Limit: –

Donation to Government or any approved local authority, institution or association to be utilised for any charitable purpose other than promoting family planning. Any other fund or institution which satisfies the conditions of section 80G(5). To any authority constituted in India by or under any law for satisfying the need for housing accommodation or for the purpose of planning development or improvement of cities, towns and villages or for both. To any corporation established by the Central or any State Government specified under section 10(26BB) for promoting interests of the members of a minority community. Any notified temple, mosque, gurdwara, church or other place notified by the Central Government to be of historic, archaeological or artistic importance, for renovation or repair of such place.

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Which deduction is eligible for 100% deduction?

Section 80G deduction of the Income Tax Act is allowed for amount paid by the taxpayer as donation to any fund or institution or charitable Trust. All donations are not treated equally under Income Tax Act. Donations to certain funds and institutions qualify for 100% or 50% deduction without any qualifying limit.
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Which type of loan is interest never tax deductible?

Interest is an amount you pay for the use of borrowed money. Some interest can be claimed as a deduction or as a credit. To deduct interest you paid on a debt, review each interest expense to determine how it qualifies and where to take the deduction. For more information, see Publication 535, Business Expenses and Publication 550, Investment Interest and Expenses,

Investment interest (limited to your net investment income) and Qualified mortgage interest including points (if you’re the buyer); see below.

Types of interest deductible elsewhere on the return include:

Student loan interest as an adjustment to income on Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors, For more information, refer to Topic No.456, Publication 970, Tax Benefits for Education and Can I Claim a Deduction for Student Loan Interest? Non-farm business interest. See Publication 334, Tax Guide for Small Business and Publication 535, Business Expenses Farm business interest. See Publication 225, Farmer’s Tax Guide and Publication 535 Interest incurred to produce rents or royalties (this may be limited). See Publication 527, Residential Rental Property and Publication 535

Types of interest not deductible include personal interest, such as:

Interest paid on a loan to purchase a car for personal use. Credit card and installment interest incurred for personal expenses. Points (if you’re a seller), service charges, credit investigation fees, and interest relating to tax-exempt income, such as interest to purchase or carry tax-exempt securities.

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What is the difference between 24B and 80EE?

What is the difference between Section 80EE and Section 24(b) of the Income Tax Act? – Under Section 24(b), a deduction of Rs 2 lakh is allowed for self-occupied property, and the entire interest is deductible for let out property. However, under Section 80EE, an additional deduction of Rs 50,000 is allowed only after exhausting the limit of Section 24(b).
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What is the maximum limit of section 24B?

What Is the Maximum Deduction Limit Under Section 24B? The maximum deduction limit on the interest of a loan is ₹ 2,00,000. It is applicable for both rental and self-occupied housing property. Individuals owning two self-occupied housing properties can claim a deduction on the interest.
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What is Section 24B?

Introduction – Section 24b of income tax act allows deduction of interest on home loan from the taxable income. Such loan should be taken for purchase or construction or repair or reconstruction of house property. Such deduction is allowed on accrual basis, not on paid basis.

In other words, the interest payable for the year is allowed as deduction whether such interest is actually paid or not. Deduction can be claimed for two or more housing loans. The deduction can also be claimed for two or more houses. For claiming deduction under this section, person must be the owner of the house property and also loan should be in his name.

Inclusions/Exclusions in Interest Interest includes service fees, brokerage, commission, prepayment charges etc. Interest/penalty on unpaid interest shall not be allowed as deduction. Type of Loan for which deduction allowed The deduction shall be allowed irrespective of the nature of loan whether it is housing loan or personal loan from any person/institution.
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Can I claim both 80EEA and section 24?

Section 80EEA and Section 24 – Under Section 24, homeowners can claim a deduction for interest payments up to Rs 2 lakh on their home loan, if the owner or his family resides in the, The deduction of up to Rs 2 Lakh applies even when the house is vacant.

If you have rented out the property, the entire home loan interest is allowed as a deduction. If you are able to satisfy the conditions of both Section 24 and Section 80EEA of the Income Tax Act, you can claim the benefits under both the sections. First, exhaust your deductible limit under Section 24, which is Rs 2 lakh.

Then, go on to claim the additional benefits under Section 80EEA. Therefore, this deduction is in addition to the Rs 2 lakh limit allowed under Section 24.
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How much home loan interest and principal is exempt from tax?

Frequently Asked Questions – Does Home Loan Top-Up offer Tax benefit? A top-up home loan is eligible for tax benefits under Section 80C if utilized for purposes of purchase or construction of residential house property and Section 24(b) only if it is utilized for acquisition, construction, repair, renewal or reconstruction of the residential property depending upon the deduction claimed.

  • Does home loan protection insurance provide tax benefit? You can claim tax deduction under section 80C on the premium paid for home loan protection insurance plan.
  • The deduction is not allowed when you borrow the premium money from your lender and repay via EMIs.
  • Who is eligible to claim tax deductions on housing loans? Tax deduction can be claimed by the owner of the property.

If a home loan is taken jointly (such as by a spouse), each borrower can claim deduction on home loan interest in the ratio of their ownership and provided both are servicing the loan. If I construct a house and sell it after a few years, can I claim tax deduction? If you sell the house within 5 years from the end of the financial year in which possession of such property is obtained, as per Section 80C, the tax deduction with respect to repayment of principal amount of the loan claimed will be reversed.

Up to Rs 2 lakh under Section 24(b) for self-occupied home Up to Rs 1.5 lakh under Section 80C

Note: The information above is merely illustrative and educative in nature. Readers are advised not to rely on the same and seek independent advice from their tax consultant to compute the amount of tax deduction readers may be eligible for.
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Can you claim both education credits?

There are several differences and some similarities between the American Opportunity Tax Credit (AOTC), the Lifetime Learning Credit (LLC) and the deduction for tuition and fees. You can claim all three benefits on the same return but not for the same student or the same qualified expenses. See ” No Double Benefits Allowed ” for more information on claiming one or more education benefits.
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How many times 80EE can be claimed?

Section 80EE allows income tax benefits on the interest portion of the residential house property loan availed from any financial institution. You can claim a deduction of up to Rs 50,000 per financial year as per this section. You can continue to claim this deduction until you have fully repaid the loan.
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Can I claim 80E while filing ITR?

FAQs – Can I claim deduction u/s 80E for an education loan taken from relative or friend? No. In case you have borrowed money from a relative or a friend, you would not be able to claim deduction under this section. Can I claim deduction u/s 80E if my father has paid the loan? No, you can not claim deduction u/s 80E.

However, your father can claim a deduction u/s 80E. Because relative includes children of an individual. What does higher education mean under section 80E? Higher education includes all the fields of study pursued after passing the senior secondary examination or its equivalent exam. It includes vocational as well as regular courses.

For my daughter’s further education in the United States, I took an employee educational loan from the company that I am employeed at. Can I claim a deduction under section 80E? No, deduction under section 80E of Income Tax Act can only be claimed if the loan is taken from a financial or charitable institution.
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Can I claim both section 24 and 80EE?

Q – Can I claim a tax benefit under both section 24 and section 80EE in a single year? I bought my first house last year. – Yes, You can claim a tax benefit under both section 24 and section 80EE in a single year. Tax deduction under Section 80EE of the Income Tax Act 1961, can be claimed by first-time home buyers for the amount they pay as interest on home loan.
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