What are the tax benefits of education loans?

The ever-increasing cost of educationis worrying parents who want their children to pursue higher education. Financing the high-pricededucation is a matter of concern for all such parents. However, the last decade has seen Indian banking industry coming to the rescue of such parents by way of granting education loans. Like the banking sector, the income tax laws have also kept pace with the need of supporting these students and parents. In this article, I shall discuss the various aspects of tax benefits surrounding education loans. Nature of deductionThe income tax laws allow you to claim interest paid by you in respect of an education loan against your taxable income without any upper limit. However, the deduction is available only in respect of interest and there is no provision in the present law for allowing deduction on the repayment of the principal amount. Moreover, there is no restriction as to when you can start claiming this deduction. You can start repayment of these loans during the period your child is studying or after completion of his studies. It is important to know that there is no bar on claiming tax benefits in respect of tuition fee paid out of the education loans taken by you and interest paid on such loan. You can claim both the deductions i.e. deduction in respect of tuition fee and interest on loan taken for paying such fees simultaneously. Article continues below the advertisement... When and for what period?The deduction is available on the basis of actual payment of interest. If you pay the interest for earlier years in a single year, you will get the deduction in respect of all the actual interest paid irrespective of the year to which the interest relates. If you are paying arrears of interest, collect certificates mentioning the total amount of interest paid by you during the year from your banker. The deduction for interest payment is available for eight consecutive years. The first year term shall begin from the year in which you first start paying the interest on such education loan. This year may or may not be necessarily the year after you have obtained the loan. In case you have decided to opt for moratorium during the education period, the eight year period shall start later. However, if your loan tenure exceeds eight years, you cannot claim the deductions beyond the consecutive period of eight years. If you repay the loan before eight years, logically, the deduction will not be available once the loan is fully repaid. Therefore, you should plan to repay the education loan within eight years. Which courses qualify?Any education loan taken for pursuing any course after senior secondary examination (HSC as is popularly known) qualifies for this purpose. Earlier, this benefit was given only for the full-time courses of graduation or post graduation in specified fields like medicine, engineering, etc. However, the budget of 2009 changed all this and now you can claim tax benefits in respect of part-time courses too. What is required is that the course should be pursued from any government-recognised school, board or university, though not necessarily under the central government. It may be recognised even by a local authority. Even a part-time course or a diploma course will qualify for the purpose of claiming this interest deduction, provided the institution imparting such course is recognised. Deduction for tuition fee in respect of two children is available under Section 80 C if the education institution is situated in India. However, the interest deduction for education loan can be claimed even if the study is pursued outside India. Who can claim the benefit?The benefit is available only to an individual and not to the HUF (Hindu Undivided Family) unlike many income tax benefits which are available to individual and HUF both. Earlier, the law provided for deduction of interest only to the person who had taken the loan for his own studies. This was amended in the budget of 2007 and since then you can claim deduction if the loan has been taken for study of yourself, your spouse, child or any other child for whom you are a guardian. It is advisable to claim the benefit of interest for such loan in the income tax returns of the person who falls in the higher tax slab. Generally, it would be the parents of the student who normally fall in the higher tax slabs as it is highly unlikely that the person for whose education this loan is taken falls in the higher slab. The parents can take the benefit of interest deduction in case the interest is agreed to be paid during continuance of the education. In case the person for whom the loan is taken falls in higher tax slab, he can pay the interest and claim it in his income tax returns. Therefore, it is advisable to take an education loan in joint names of the parent and the student so as to have the flexibility for claiming the interest. Where to borrow? Interest will be eligible for deduction if the loan is taken from any financial institution or approved charitable institution. Interest on loan taken from relatives or friends will not be eligible for deduction. The first category covers all the banks including cooperative banks and one non-banking institution, Credila, a subsidiary of, HDFC Ltd,is also approved by the government for this purpose. There is another category of institutions, which includes charitable institutions and NGOs, from where loans can be taken to qualify for tax benefit on interest. Consequences of defaultIn case the loan has been taken for the purpose of your own education, it is very important that you service it properly. Defaults have long-term ramifications for you. Since you are at the beginning of your career and will need to avail many credit facilities, any default will spoil your credit history. This will jeopardise your chances of getting credit in future. So, now with easy availability of education loans coupled with tax benefits, you can realise your dream of making it big in life. Source:dnaindia

GUIDENCE TO RECENTLY PROMOTED SUPDTS – WHO HAVE DECIDED TO REJECT THE PROMOTION

Here is some important guidelines to the Insoectors who are preparing to reject the  promotion after 18 years of service  for want of going to Vizag Zone. As per the existing rules once you reject the promotion you will be debarred for one year for consideration in future DPC. You will be eligible to be considered only in DPC to be conducted after one year from the date of DPC in which you have been promoted. I hope there is no doubt about this.

Now comes to the factual position at CCA Hyderabad.  The DPC  for promotion to Supdt has been conducted on 6/7.5.2011. In case you have refused promotion, you will be considered for next DPC to be conducted after 6.5.2012. As per the latest orders issued by DOPT and CBEC, DPC is required to be conducted by 31^st march of the year. So the next DPC will be conducted by 31^st March 2012 and you will not be eligible for the same as you are not going to complete one year. Most probably the CR is going to be implemented in the F.Y.2011-12 itself and a special DPC would be conducted to fill up the CR vacancies even before March 2012. Even if the CR figure Supdts is taken as 300 for CCA Hyderabad, the Inspectors of the year 2000 also will be covered. In case, vacancies upto March 2012 are taken into consideration, the figure may extend further. Finally you will be considered for the DPC to be conducted in March 2013, by the time even 2002 Inspectors may also get promoted before you.

So think twice before you reject your promotion and become junior or work under a 10 year junior in open category. This rejection is also may likely to affect your insitu  promotion if implemented. 

Apart from above, you will be late by one year (or as long as you accept your promotion) in your second MACP.

CR ON FAST TRACK- CAN HOPE SOME RELIEF

Cadre restructuring proposal has been cleared by FM. Now note will go to cadre review committee comprising Cabinet Secretary, Secretary Revenue, DOPT &
Expenditure and also Chairman of CBEC in our case. Secretary Revenue & Expenditure as well as our Chairman have already cleared it. Only the formal clearance of Secretary Cabinet & DOPT is required as the part of cadre review committee.

                  Now, it is clear that they would do nothing more for us in the matter and only 24% of our officers would be able to retire as AC as per the existing formula. It is, however, also true that we are going to get the promotional posts never expected. But side by side it is also true that all the eligible officers belonging to other cadres would be promoted and their promotional vacancies would remain unfilled. The Examiner of 2005 & Appraiser of 2008 will become AC. Moreover, direct recruit Examiner of 2005, 2006, 2007 & so on will certainly retire as Commissioner or above.
So, it is not the end. Be ever ready for the struggle.

Source: Ravi Malik Sec. Gen Supdts'. Assn.

Endless waiting for Inspectors.

It is more than the usual this time . All seasoned Officers know that  the happy go pastime of AGT starts as soon as the financial year is completed and it starts with the guessing game that AGT will be issued in April itself. But some wise guy interrupts and gives his gyan funda that we have seen this time and again and the first Orders can be expected only around May 20th or so.

But this time the ides of March seem to Have turned into ides of May for the Officers  of the Customs & Central Excise in Hyderabad and Vizag as still the IZT orders are not yet in sight.

Cell Calls are criss crossing across Andhra Pradesh in this  soaring temps of 110 degress fahrenheit.

Officers are enquiring whether  the file is moving, whether C.C has approved and so on .

One thing which beats anybodys comprehension is why so much time and energy has to go into this exercise of IZT, ICT and Commissionerate Orders when there is total decentralisation of Cadre Control Authorities.

Our Special reporter reports that Chief Commissioner Vizag is keen that a batch of Senior Inspectors may be posted to Vizag zone and its because of this that the entire exercise is taking time though the meeting of CoC was held on 18th of May.

Keep Guessing folks

Thank You Pranabda.

The government has exempted salaried people earning up to Rs 500,000 annually from filing income tax returns.

A move that will bring relief to about 80 lakh people was announced by the Finance Minister Pranab Mukherjee  when he presented the Budget in February.

On Tuesday, Pranab Mukherjee said this will be applicable in the 2011-12 assessment year for the income earned in 2010-11. He said that a notice to this effect will be brought out soon.

This move will reduce the compliance burden on small taxpayers. In case such a salary earner has income from other sources like dividend, interest etc. and does not want to file returns, he will have to disclose such income to his employer for tax deduction.

The Form 16 issued to salaried employees will be treated as Income Tax Return, he added.

Asking the Central Board of Direct Taxes to be vigilant in suspected money laundering cases, Mukherjee cautioned that terror activities and other crimes are being funded by anti-national elements through illegal transfers.

Mukherjee disclosed that to check these transfers, government has approved setting up of Directorate of Criminal Investigation in Income Tax Department itself.

The Directorate will track the criminal activities before, during and after the crime is committed.

Expressing his keenness on fiscal consolidation, Mukherjee stressed that fiscal deficit has to be reduced drastically to achieve the goal.

CUSTOMS & FILM ACTRESSES SOME INTERESTED NEWS

"Jism" Actress dusky siren detained by Mumbai Customs

Bollywood actress sexy siren  Bipasha Basu was detained at the  Sahar international airport here on Thursday for not declaring goods but let off soon after paying duty, days after a similar incident involving starlet Minissha Lamba.

The ‘Jism' actress was intercepted after she had crossed the green channel without making any declaration on her arrival from London.

“Actress Bipasha Basu was caught carrying come undeclared jewellery . She was let off after she paid the duty,” according to inside sources. P.M. Govande, Commissioner of Customs, Airport, however, denied that she was detained.

“She was carrying undeclared goods worth over Rs 65,000 and so we asked her to pay the duty of Rs 13,000 which she did,” he said, adding “no fine or penalty” was imposed.

Customs sources said she was carrying sandals, sunglasses and perfume, which she did not know also needed to be declared. “She was very cooperative and showed all the bills,” they said.

In a brief statement the ‘No Entry’ actress said, “It was just a routine check up at the airport and many others were being checked as well. I paid Rs 12,000 as taxes against some personal goods. I think the customs team is doing an excellent job.”

Minisha Caught by "Customs ke lambe haath"

Bollywood actress Minisha Lamba  was detained recently  at the  international airport here after undeclared jeweller was allegedly found in her possession.

Lamba, who landed at the Chhatrapati Shivaji International Airport from Cannes , France was crossing the green channel when she was intercepted,  customs sources said.

During the luggage check, she was found carrying jewellery worth over Rs 50 lakh, the officer claimed.

However, customs officials have refused to reveal how much of the jewellery being carried by the actress was undeclared.Minisha who was returning from Cannes, where she had attended the opening ceremony of the international film festival, was interrogated.

The 26-year-old whose debut film Yahaan garnered much critical acclaim, has starred in movies like Bachna Ae Haseeno  Corporate and Well Done Abba.

The actress had tweeted about losing baggage in Nice earlier in the day.

source rediff.