Education Loan

Tax Benefits on Securing Education Loan 2023

Tax Benefits on Securing Education Loan 2023

Tax Benefits on Securing Education Loan 2023 –Hi everyone! Hope you are all doing well. Welcome back to another blog. So, guys do you know the tax benefits of securing an education loan? If yes, then you are at the right platform, because today I will tell you about the tax benefits of securing an education loan. Nowadays all students are looking for education loans to finance their educational expenditures. Many students are taking advantage of education loans, but along with the advantages of loans, there are some disadvantages too. So, read the whole blog carefully to solve all of your queries regarding tax benefits for securing an education loan in 2023.

Tax Benefits on Securing Education Loan 2023
Tax Benefits on Securing Education Loan 2023

Eligibility conditions for Education Loan

The students that are willing to apply for education loans must have to fulfill some conditions. These conditions are different for different banks, or organizations. But some general eligibility conditions are given below;

  • The applicant must be at or above the age of 18 years
  • The co-applicants must have a regular income resource
  • Applicant must have 50% marks in the recent degree
  • Students must have to continue their higher education at a recognized institute
  • Students are eligible to take a maximum loan of amount Rs 30 lakhs per family.

Required Documents

Applicant must have to attach the following documents to apply for the education loan, in case of any missing document, you are not eligible to secure an education loan;

  • Income statements
  • Salary slip
  • Form 16
  • Income-Tax Returns of the previous 2 years
  • Computation of income of previous 2 years proficient by a Chartered Accountant
  • Bank Statement/Pass Book of previous 6 months
  • Copy of the admission letter issued by the Institute with the ‘fee schedule’
  • Mark sheets of SSC, HSC, Degree Courses, National level entry test
  • birth certificate
  • passport
  • Aadhaar card
  • PAN card
  • driving license
  • Evidence of Residency
  • Photo identification evidence through an Aadhaar card, voter id, PAN card, passport, driving license
  • Passport-size photographs of the applicant and co-applicant
  • Guarantor form (non-compulsory).

Additional Documents

  • Recent salary slip
  • Details of other assets
  • Mutual Fund Statement
  • Occupancy certificate
  • A deed or rent agreement

Establishment under Section 80E

Under Section 80E of the Income Tax Act, interest paid on an education loan is eligible for tax benefits. It means that you can start in contradiction of total income got throughout a monetary year; thus, dropping total taxes allocated.

Eligibility for Tax Deduction under Section 80E

The following conditions are applicable to get tax benefits on an education loan;

  • Only persons are eligible for tax inferences,
  • Hindu undivided families (HUF) and companies are not eligible for tax inferences under this section.
  • Loans occupied by friends or relatives are not eligible for tax inferences under this section.
  • Parents are also eligible to apply for tax deductions under this section.
  • The students that are not able to pay taxes through their income are also eligible.
  • This tax deduction is only applicable during the course.

Tax benefits on Education Loans

Now I will tell you the tax benefits of education loans;

  • Section 80E of the Income Tax Act provides tax deductions on given interest rates to education loans. Yet, the IT department has illuminated that the principal amount given during the loan duration is not eligible for tax benefits under this section.
  • All type of education loans is covered under these tax benefits
  • The perimeter of eight years is also valid in the situation of education loans.
  • There is no cover on the interest rate which be suitable to be deducted. It means that if you have paid an interest rate of 11% and you pay INR 50,000 as interest in a year, you can privilege deduction up to an extreme amount of INR 54,250 that comprises mutual principal and interest components.
  • The income tax benefit can be demanded in the year in which you have compensated the principal amount as well as the interest component.
  • If you have not demanded the income tax benefits in former years, you can get the tax benefits and privilege it in the following year.

Documents Required

The following documents are necessary to attach with the application form to apply for the tax benefits on an education loan;

  • Income Tax Return (ITR) Form
  • Form 16B –issued by the lender to each borrower after making a deduction of TDS from the loan amount.

TDS on Education Loan Interest

There is no TDS deduction made on the interest rate given on an education loan. Though, you have to keep in view that only the interest rate given throughout the monetary year is suitable for this tax deduction benefit.


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