trapped for cash? If it is about the fees you need to join the Indian Institute of Management or the Indian Institute of Technology, or any other professional course for that matter, don't give up.
Consider an educational loan.
Not only will you be able to get the professional degree you want, you will even get a tax benefit when repaying the loan.
1. What can you use the loan for?
The loan is available for higher education in technology, engineering, architecture, medicine, management and applied or pure sciences, including mathematics and statistics.
Higher education refers to full-time graduate or post-graduate courses.
2. Where can you get the loan?
You can get the loan from any financial institution, bank or approved charitable institution.
If you take a loan from your employer, you cannot claim tax deduction.
3. For whom can you take the loan?
The loan is meant for you only.
You cannot claim this deduction if you have taken the loan for a dependent or any other member of your family.
4. How can you repay it?
You can start repaying the loan once you finish your studies and start earning.
5. When will the deduction be available?
If you take an education loan, you can claim a deduction under Section 80E of the Income Tax Act.
It will be applicable when you start repaying the loan. These deductions are available up to eight years in all. You cannot claim the deduction for more than eight years. Try and repay your loan within this time frame.
Also, you need to pay the loan out of your earned taxable income.
6. What is the amount of deduction available?
The amount of deduction would be the lesser amount of the following:
i. Total amount paid during the year -- this includes repayment of principal amount of loan and interest payment
ii. Rs 40,000
Any amount of interest paid by you will be deducted from your income, thus reducing the tax you have to pay.
But the principal amount is no longer eligible for deduction. Only the interest can be deducted. The good news is there is no limit to this amount.
Cnergies is an end-to-end solution provider for Tax-Payroll-HR and provident fund.