Section 80C Child Education Benefit Applicable only if education is pursued in India

My son is studying at an American university. I took out a personal loan of Rs. 8 lakh, as State Bank of India (SBI) refused to grant her a loan for her tuition fees for study abroad. Can I benefit from a tax advantage for the amount of tuition fees, as well as for the interest paid on the personal loan contracted for his studies?

Answer There are two separate provisions in the income tax laws under which an individual can claim benefits for expenses incurred in raising children. The first benefit is available under Section 80C of the Income Tax Act 1961 in respect of tuition fees paid for full-time education at a university or school in India for your two children. The second benefit is available under Section 80E of the Act with respect to interest paid on the loan taken out for higher education for certain specified relatives, including the taxpayer’s children. This education loan benefit is available to study anywhere, and not necessarily in India. To benefit from this advantage, the loan must be contracted either with a charitable institution or with a bank/financial institution.

Since your son is studying outside India, you are not eligible for Section 80C benefits. With respect to the deduction of interest paid on a personal loan taken out for your son’s education at an American university, Section 80 E does not specifically mention the word “educational loan”, but refers to the “loan taken in order to pursue higher education. education. So, in my view, you can claim a full deduction of the interest you paid on the personal loan, provided you can conclusively establish that the end use of that personal loan taken out is to fund the your child’s higher education.

I own three residential properties. I sold one of them in April 2022 and bought another by investing the profit made on the sale of this property within two months of the date of sale. Am I liable for tax on these capital gains?

Answer: The answer to your question will depend on how long you held the property sold in April 2022. In the event that it was held for more than 24 months, the profits will be treated as long-term capital gains, and you can claim exemption under section 54 of the Income Tax Act 1961 as you have already invested the capital gains on these properties to purchase another residential property within two months. Please note that to claim such an exemption, there is no restriction on the number of residential homes the taxpayer may own at the date of sale of the residential property.

However, if the property has been held for less than 24 months, these profits will be treated as short-term capital gains, and no tax exemption will be available in respect of these gains, even if the profits are reinvested to purchase another residential house. Short-term capital gains arising from the sale of these properties are treated as regular income and will be taxed at the slab rate applicable to you.

The author is a tax and investment expert.

(Disclaimer: Opinions expressed are those of the author and Outlook Money does not necessarily subscribe to it. Outlook Money will not be liable for damage caused to any person/organization directly or indirectly.

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