Interest Paid On Education Loan Taken For Son Is Eligible For Deduction Under Old Tax Regime

Under Section 80E of the Income-tax Act, 1961, a person who has taken an education loan for the purpose of higher studies for self, spouse or any children, from any financial institution or approved charitable institutions, can claim deduction in respect of interest paid on such loan under the old tax regime.  

So, you can claim the tax benefits in respect of the interest paid on the loan in case you had borrowed the money, or you were a co-borrower for this loan. Do note that the repayment of the principal amount of education loan cannot be claimed for any tax benefit under the provisions of the income tax laws. 

Yes, you can invest in RBI’s Floating Rate Savings Bond as many times as you want. Moreover, there is no upper limit up to which you can invest in these bonds in a year, or cumulatively. The interest on such bonds is floating and is benchmarked against the interest payable on National Saving Certificates (NSC), and it is higher by 35 basis point than that offered on NSC. The interest gets reset half-yearly on June 30 and December 31 every year. 

Under the clubbing provisions, the interest earned on the bond bought in the minor’s name will become taxable in the hands of the parents with the higher income, irrespective of who has made the investment. 

Under Section 80CCD, the tax deduction in respect of NPS contribution is available only to the subscriber, unlike in case of Public Provident Fund (PPF), were the parents and spouse can also make contribution and claim deduction under Section 80C. Please note that the deduction under Section 80C and Section 80CCD for your own subscription are available only if you opt for the old tax regime.