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Tax saving on educational loan

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babugr

dgm

348 Points Posted on 27 February 2015

Dear Experts,

Kindly advise me on the following:

1. Can I avail tution fees u/s 80C and education loan intt. u/s 80 E simultaneously for my child

2. Edu. loan available at 12.75% - 13%, whereas I can take loan against FD with 1% higher intt. rate, in such case can I avail tution fees & intt u/s 80 c & 80 e

3. Finally is it advisable to take loan or self finance from FD from tax saving angle, as I am bit confused, I am a senior citizen with about 10 Lacs income and a tax expected 95000 for FY 2015-16

thanks

GR Babu

Replies (1)

Raphael

Chartered Accountant

164 Points Posted on 27 February 2015

Dear Sir,

Yes you can clam 80C deduction for tution fees paid and 80E deuction for edu loan together.

In case of loan against FD or from bank it depends upon the effective interest rate. In your case as your are in 20% slab rate, the effective interest rate will be arounf 10.4% for edu laon. Compare this with the laon against FD interest rate and then take a decision.

One thing to note is that in case of 80C deduction can be claimed if tution fees is paid to any indian entity whereas in 80E both indian as well as foriegn institutes are covered.