Student Loans : Change in Tax Rebates Scheme

[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

[look_beyond_CAT]

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

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

[ManDevIan]

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

Hey Tarun

I've posted an analysis about the same issue on my blog during first week of March... you can go thru the same here --> http://prateek2410.blogdrive.com/archive/64.html
http://prateek2410.blogdrive.com/archive/65.html

Hope this clarify things!!

Prateek

[tarun_s]

frnds,

thanks for the replies......So we stand to loose as an implications of all these decisions.

Seems like for the government it is more important to give rebates on things like house loans and not on education loans. Guess promoting education is still not priority no 1

thanks anyway

regards

tarun

[saurabhzeal]

hello

I have taken eduational loan of 4 lac (1 lac every semester) at 12.5% for my MBA. will it be better to pay interest now or later

Originally Posted by look_beyond_CAT

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

[Neo2000]

You've asked the right question in the right place. Unfortunately, the thread is 3yrs old which means the info might not be relevant. Suggest openin a new thread to discuss the same since a lot of B-schoolers are probably going through the same

Locked.