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Tax benefits of a personal loan for education

  • Highlights

  • Personal loans for education don’t require a collateral

  • Higher loan amount than an education loan

  • Tax deductions for interest payable

  • No cap on rate of interest for tax benefit

Personal loan for education

Pursuing higher studies can be expensive, especially abroad. But it’s also an opportunity that can be both, a great learning experience, and can boost one’s career prospects significantly. Taking a loan would probably be the best way to cover the cost. You can opt for an education loan or a personal loan.

Personal loans are unsecured loans, which means they don’t require a collateral or security. They are easier to avail and have greater flexibility in terms of repayment. Moreover, opting for a personal loan for education would also mean tax benefits.

Tax benefits

Section 80E of the Income Tax Act, offers deductions on the interest paid on loans taken for higher education. The principal payments made towards the loan, however, do not qualify for such a deduction.

Whether you’re taking a loan for yourself, your spouse or your children, you’re eligible for the tax deductions under Section 80E. Even if you’re taking the loan for somebody you are the legal guardian of, you can avail this tax benefit. However, the loan must be in your name.

In order to be eligible for the tax benefit, you should take the loan from a bank or a registered financial institution. The benefit is available for up to eight years or until the loan repayment, whichever is earlier.

The best feature of this benefit is that there is no cap on the rate of interest that is eligible for the deductions.

30% Tax Bracket

If you’re in the 30% tax bracket, there’s a major tax benefit for you. There is no cap on the interest amount that is eligible for deduction. For instance, if the interest paid is Rs.1 lakh in the current financial year, you can deduct it entirely from your taxable income. This would save you almost Rs.30,000.

Thus, there’s no need to give up your higher education dreams because of financial worries. Availing personal loans just became even easier thanks to pre-approved offers from Bajaj Finserv. Simply share a few details and get your offer.

DISCLAIMER: The personal loan features mentioned in this article are subject to change, based on policy revisions. For the updated product details, please visit the Bajaj Finserv Personal Loan page here.

 

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