I pay Rs.1000/-p.m. towards interest for the Education Loan sanctioned to my son by SBI for studying BE. He is doing 2nd year . In budget 2007, FM has told that parents can claim rebate for interest amount paid in the Education loan taken for children, under sec.80E. How much can be deducated from the taxable income?
In a silent but significant change, the Finance bill proposes to amend Section 80E dealing with deduction on the interest paid on a loan taken for purpose of pursuing higher education. So far, only the concerned individual who was actually pursuing higher education was eligible for the deduction. The definition of higher education is such that it would mostly include only full time courses and hence, most individuals normally had no income during the period of the course and were thus unable to get the benefit of tax deduction during the period of the course. Under the proposed amendment, parents or spouse of the concerned individual can also take the loan for the concerned individual's higher education and claim the benefit of deduction of the interest paid on such loan without any limit. This tax benefit will reduce the effective cost of education loan and thus encourage the off take of loans for the purposes of children's higher education
Source(s):
Tax Guru
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