New Delhi: The government has extended tax concession on interest paid for educational loan to all streams of studies including vocational courses, benefiting students from all economic strata opting for higher studies, from this academic session onwards.
The concession was till now restricted for graduate and post-graduate courses in engineering, medicine, management and post-graduate courses in applied sciences or pure sciences including mathematics and statistics.
"The latest amendment in section 80E of the I-T Act will bring all the streams of education (apart from regular ones) and vocational courses under its ambit. This will benefit the students who apply for graduate and postgraduate courses in various streams during the upcoming academic session," a senior Finance Ministry official said.
It will help all such students who take up vocational courses and studies in streams of arts and commerce. Till now this concession was only allowed for regular courses in engineering, medicine, management and pure and applied sciences, the official said.
The new arrangement will be applicable for 2009-10 financial year and help students who take loans for studies during assessment year 2010-11 and the subsequent years, the official said.
With the amendment in Section 80E (deduction allowed in respect of interest on loans taken for pursuing higher education) of the Income Tax Act, the new clause in the I-T Act will "extend its scope to cover all fields of studies (including vocational studies) pursued after passing the Senior Secondary examination or its equivalent from any school, board or university recognised by the central government or state government or local authority or by any other authority authorised by the central government or state government or local authority to do so."
Interestingly, the I-T concession on such a loan will also be extended to parents who have legally adopted a child.
"This will encourage parents to adopt a child without worrying for the expenses of the child`s studies. An individual can take a loan under this category for his or her spouse or children too," the official said.
"Further, the scope of the term `relative` has also been expanded in relation to an individual to mean the spouse and children of that individual or the student for whom the individual is the legal guardian," the latest I-T amendment for section 80E states.
Section 80E of I-T Act provides for a deduction to an assessee, being an individual, on account of any amount paid by him in the previous year by way of interest on loan taken from any financial institution or any approved charitable institution for the purpose of pursuing higher education in
specified fields of study.