16-04-2005, 08:27 AM
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Originally Posted by tarun_s
Dear all
how exactly will the change in the rebate structure impact students that have taken student loans.
I havent been able to get the complete information but do tell me what is the true picture with regard to this development.
Regards n thanks
Tarun
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PRE-BUDGET :
taxable income to be reduced by 40k (upper ceiling) for repayment of student loan. it included principal+interest.
POST_BUDGET :
taxable income to be reduced for repayment of student loan (no ceiling). But, INTEREST ONLY.
Example 1:
Suppose you take a loan of 4 lacs and your EMI is 1,00,000 (principal- 60k and interest- 40k) per annum.
After 2 yrs of management education, your taxable incoome is say arnd 5 lacs.
Pre-budget: you could deduct 40k (repayment of student loan) from 5 lacs and hence your taxable income becomes 4.6 lacs.
Your net tax savings (through student loan)- 13k (appx)
Post-budget: you could deduct 40k (repayment of student loan : interest only) from 5 lacs and hence your net tax saving (through stuent loan) is 13k (appx)
Example 2:
Loan amount 15 lacs.
EMI - 3 lacs per annum (principal - 2 lacs, interest - 1 lac)
Pre-budget: deduction from taxable income 40k. Net tax saving - 13k
Post-budget: deduction from taxable income 1 lac. Net tax saving - 30k
Niraj