Tagged: Education Loan

ATM :: Planning your Taxes and your Loans

To avoid last-minute hassles, it is always good to plan taxes and loans in advance.
Sep 15, 2017 06:29 PM IST | MoneyControl.com


In order to avoid any last minute hassles while filing your tax returns, you need to ensure that you plan your taxes in advance. If you have the right foresight and plan your loans and taxes properly, then you can surely save a lot of money.

Here are some key details on planning your taxes and loans…

Salary restructuring

There are a few components which can help in bringing down your tax liability. For this, you need to reallocate your salary. Like medical expenses which are reimbursed by the employer, certain food coupons, house rent allowance, leave and travel allowance etc., should be used efficiently to bring down your tax liability.

Proper use of tax exemption

There are several tax saving options under 80C and 80D. Under 80C, you have options like NSC, PPF, a premium of life insurance, 5-year FD with banks and post office etc. 80D includes premium paid in Mediclaim policies.

Your tax plan and financial plan must go hand in hand

Your tax-saving plan has to be in tandem with your financial plan. Opt for tax-saving options which will contribute to achieving your financial goal.

The loan factor

There are loans which can actually help in reducing your tax burden. So, you should ensure that you make use of this benefit to the maximum.

Exploiting the loan factor:

If you are planning to take a home loan for buying a home, then restructure it in the best possible way as it can give you tax benefits. Under Section 80C, the principal repayment of housing loan can give you a deduction of up to Rs 1,50,000 and under Section 24B, the interest paid on a housing loan can get you a deduction of up to Rs 2,00,000.

Now, if the home loan amount is huge, then it may cross the tax exemption limit. In such cases, you can opt for a joint loan with spouse or parents or siblings. This will help both the individuals to get the tax benefit. It, thus, becomes a useful tax-saving option for the entire family. It should be noted that stamp duty and registration charges that are paid while transferring the property are also eligible for income tax deduction under the Section 80C.

If you take a loan to buy a second home, then to you can get the advantage of tax deductions under Sections 80C and 24B. Under Section 80C, the principal loan amount will be considered and under Section 24B, the interest paid towards the loan will be considered.

Education loan can also be taken for self or for your spouse or children. You can get tax benefits if you take the loan from a scheduled bank or a notified financial company. You can easily claim a deduction for payment of interest. The tax benefits can be enjoyed for a maximum period of eight years or on the term of the loan repayment.

Personal loans also come with the tax advantage. Personal loans which are taken for renovating or repairing home are helpful. Personal loans taken to make down payment of home loan will also give you the advantage of tax benefit.

To sum up…

Thus, there are different ways and means of reducing your tax liability. Loans give you the dual advantage. They take care of your financial needs i.e., buying a home or higher education of your children and at the same time, they also give you the much needed tax-benefit. So, explore all the pros and cons of the various loans and use them to plan your taxes effectively.

Source: https://goo.gl/FAj4J9

ATM :: 10 Ways to Invest Wisely and Save Income Tax

Are you still trying to figure out ways to save tax? Tax saving is not as difficult as we think. We just have to be aware of things that we need to do to reap the tax benefits.
News18 Specials | Updated:July 3, 2017, 2:41 PM IST | news18.com


Are you still trying to figure out ways to save tax? Tax saving is not as difficult as we think. We just have to be aware of things that we need to do to reap the tax benefits. Also, it is crucial to declare investments at the beginning of the year to your employer so that accordingly, he can adjust the TDS (Tax Deducted at Source) and you get the tax benefits in advance rather than waiting for refund from the I-T Department.

Given below are 10 Ways to invest wisely and save income tax.

Home Loan: Paying EMIs for home loan can be a burden for you but the good news is that it can help you claim the tax benefits. You can claim the interest paid upto Rs.2,00,000/- on your home loan EMIs as an exemption from your taxable income. If you make any pre-payments to your home loan, then pre-paid principal upto Rs. 1,50,000/- can be claimed as a deduction.

HUF Account: If you are earning additional income apart from your salary, then it is taxable. However, if you open a Hindu Undivided Family account and show it under your HUF then you can save tax.

Tuition Fee Payment: We usually spend hefty amount of our income to pay for the education of our children. We can get tax rebate for the amount that we pay as tuition fee for upto two children.

Leave Travel Allowance: LTA given by your employer for the expenses that you and your family have incurred on travel within India can be claimed as deduction. It’s better to plan your vacation in advance and get the LTA benefits.

Health Insurance + Medical Expenses: You can claim tax benefit up to Rs.15,000/- for self, spouse and children and Rs.20,000/- for parents above 65 years of age. Additionally, you can claim upto Rs.15,000/- annually for medical expenses by showing genuine consultation and medicines bills.

Pension Funds: Fortunately, I-T laws provide you the opportunity to reduce your taxes if you are investing in pension funds.

Education Loan Repayment: Just like tax benefits available on tuition fee payment, you can also claim deduction for EMIs that you pay towards your Education loan. So investing in your education has more benefits than just upscaling your skillset.

Employee Provident Fund: Under section 80C, not only the interest, income and maturity amount of your EPF account is exempted from tax, but also the contribution that you make to the PF account can be claimed as deduction.

National Pension Scheme: NPS is one of the most secure investment options given by the postal department. You can claim tax rebate on the amount that you contribute to this scheme.

Donations for Charity: While donating for a charitable cause you not only get the inner peace but it also makes you eligible for tax exemption.

Source: https://goo.gl/CmqgtS

ATM :: Financial Slavery: Do you really need a loan-free life?

Sukanya Kumar, Founder & Director, RetailLending.com | Aug 12, 2016, 10.28 AM | Source: Moneycontrol.com
The more we become ‘social’, the more we tend to show-off. It leads to more bad loans. It is time to shun bad loans and embrace good loans wherever required.


This is a very sensitive subject. Most of us in the financial broking business will shiver thinking what will happen, if this ever comes to of no one borrowing anymore. But let us overcome this superficial personal gain agenda and see what lies beneath.

A man in his late 20-s or early 30-s is bound to have a couple of small loans like credit cards, personal loans etc. here and there. They may be for shorter periods. As he progresses well in life and gains stability in his profession, he wants to settle himself. A big part of this ‘settlement’ is buying a home. And a home loan is generally taken for 20 years by most.

Given the current property prices across the world, buying a home with your own savings and liquidating your financial papers is not a possibility. You are bound to fall short way beyond the market price. Gone are those days when a man used to build a home with his retirement benefits and borrowing only from his provident fund account. He never used to enjoy the home fully as he has spent his hay-days staying at a rental home/company accommodation which never was his ‘own’.

The more we become ‘social’, the more we tend to show-off. If my colleague has got something which he boasts about, we have to get the better ones to overtake him. Our home-maker (to the true sense) spouse wants to buy a home with more number of bedrooms and amenities, her neighbouring friend could afford. Even our teenage children want to buy better gadgets to make sure they have their friends’ groups flocking around them and think they have the ‘latest’ ones.

There is no end to these needs, no end to loaning to purchase these, and hence the terms ‘financial slavery’. A man pays 70% of his net take home salary to pay off his monthly loan EMI-s and needs to survive with the balance 30% only, and with this lean sum pay for his home rent, children’s education and their extra-curricular activities, day-to-day expenses, food, clothing, entertainment, hobbies and also family trips and shopping.

We are afraid to start our own venture; afraid to opt for a better opportunity, if it requires us to take a study-break for a couple of months, we are even afraid to get married these days (I hear it from many 30-somethings frequently), since we are afraid to take more responsibility, given that we are already under so much debt.

Now, all of it is not that bad. There are two clear groups of loans. The good loans and the bad loans. One needs to let go of the bad loans to relieve himself / herself from being miserable, and continue happily with the good loans and feel good to have them.

Bad loans:
Any item, bought with loan-money, which depreciates in time, is a bad loan. You never recover the sum you paid, plus you pay the interest on that sum too.

For example, you buy clothes or any electronic gadgets via a consumer durable loan or you buy a car with a car loan, or you buy just some books by swiping your credit card…….. The moment you are walking out of the shop, it depreciates by 30-50% to the least. It becomes a ‘second hand’ item. You never regain the price, unless of course your car becomes a vintage one and pays off (pun intended).

So, a loan on credit card, a personal loan, a consumer durable loan, a car loan- all these are bad loans. It only boosts your ego and gifts you a ‘rich’ lifestyle and only brings momentary joy with no permanent effect on yourself.

Good loans:
A loan which enhances the worth of the purchased product over time and even crosses the mark of it, to give a handsome return over the period, also absorbing the interest cost attached to it.

A home and an education loan are in this category. A home always appreciates in price, if bought wisely with proper research in good location, and will supersede the interest cost too. The percentage of people making a true loss while selling their property is negligible.

The added advantage of taking a home loan is also the tax benefit you get under a couple of sections. There are subsidies available on affordable housing too.

An education loan while taken will be with a moratorium so that it is easy on the pocket of the student. This loan enriches you as a person and helps you get a well-paid job or find a business solution for yourself, after getting trained professionally. The return on this is lifelong. You keep reaping the benefit of you educating yourself, till your last day. The interest you pay while taking this loan is negligible, of course.

Strangely enough, the bad loans are the ones which are more expensive too!

So, to avoid enslaving yourself from paying high monthly debts, please relieve yourself of the high-interest rate loans which are eating away your month’s pay and giving no returns other than being depreciated day by day.

One last thing, many people feel themselves under a ‘burden’ of home loan and tends to close that first. Do not make that mistake ever. If you have spare money, invest in retirement plans, SIP and other low-risk debt-funds to reap the benefit when you are old and retired. By foreclosing your home loan early with the liquid cash and hence not having any money left for investment anywhere, will leave you only with a house post-retirement with no money in hand. And, you can’t eat, enjoy and spend the house for next 20-25 years of your retired life. You need money for that.

Be wise. Live a life without any bad loans. No loans at all may not be financially a good choice for the modern generation, since you want to enjoy yourself when you are young. Ultimately, we live longer now than earlier with all the medial attention we get these days.

Happy Good Loaning! Happy Freedom from Bad Loans!!

Source: http://goo.gl/wKmt0d

ATM :: Relocating abroad and consequences of defaulting on education loan EMIs

Mehul completed his B. Tech in computer science from a leading institute in Pune and was hired by a renowned IT company through a campus interview.
By: Harshala Chandorkar | Published: April 23, 2016 1:58 PM | The Financial Express


Profile: Mehul Kumar (name changed), aged 25 years, a software programmer with a leading IT MNC

Mehul completed his B. Tech in computer science from a leading institute in Pune and was hired by a renowned IT company through a campus interview. At 23 years Mehul had the world at his feet with a high paying job and promising career path charted out for him. After working for two years at the company’s Mumbai office, Mehul was deputed to work on a project in the Chicago office in US. Getting paid in dollars when the rupee was seeing its worst fall, Mehul decided to make most of his finances.

He decided to purchase a plush bungalow in an elite locality in his home town in Pune. While on a vacation back home, he chose the property and made an advance token payment to the builder. He then applied for a home loan at an MNC bank and was confident of express approval considering his high paying international job.

However within a few days he was informed by the bank representative that his home loan application had been rejected owing to his credit history in CIBIL. Mehul immediately accessed his credit report online from CIBIL and found that his report showed defaults on an education loan he had availed for his B. Tech course. Before leaving for Chicago, Mehul had not bothered to ensure repayment on his education loan EMIs as he did not think that not closing dues would impact him in any way. And now his careless attitude had resulted in a bad credit record which hampered his chances of availing the home loan for his dream house.

Solution: What can Mehul do now?
The first thing that Mehul must do is to repay his education loan dues and avail a ‘No Dues’ certificate from the bank. He should then gradually start building his credit history by regularly paying his credit card bills and EMIs on any other loans he may have availed. He should also keep checking his credit report regularly to assess the health of his credit history. As his credit history and credit score improves and shows no defaults and delinquencies, he can apply for the home loan again and be confident of its approval.

It is critical to understand that while moving abroad is a beautiful opportunity to develop both personally and professionally, one must never forget to payback and close the financial obligations in the home country. Before you go abroad for a longer period of time, it is good to decide what it is you want to do with your existing bank relations and financial liabilities.

One of the most important financial matters to sort at this time is credit card outstandings, loans and any debts that you may still owe. Here are a few tips to ensure that you have an immaculate credit history before you move abroad.

Pay and close all your credit card outstandings. If you decide on cancelling credit cards, ensure you receive a closing statement from the credit card company.

If you are running a home loan or any other loan, ensure that you make arrangements for regular EMI payments on this loan. Keep a track of the monthly EMI repayments and do inform your bank of your relocation and the new address.

It is equally critical to repay and close education loans, if you have availed any. Never think that it’s okay not to repay education loans. You credit report includes details of education loan as well.

Keep a track of your credit history by accessing your credit report and score regularly.

Protecting your credit history and score is critical even if you plan to leave the country and settle abroad. Remember that your credit history and score will affect almost every area of your life when conducting financial transactions. In some countries a prospective employee’s credit report is checked before recruitment. Therefore if you are moving abroad for work please ensure that you have a good credit history. You never know when you may be asked for your credit report!

Source: http://goo.gl/4Yux8A

NTH :: Banks learn a hard lesson worth Rs 5,192 crore on education loans

The figures speak for themselves. As on July 21, 2015, the total exposure of all banks to education loans was Rs 64,900 crore, according to RBI data. On an average, banks face an 8% default on this portfolio – that is Rs 5,192 crore.
Manju AB | Wednesday, 16 September 2015 – 7:25am IST | Place: Mumbai | Agency: dna | From the print edition


Sluggish job creation in the country is seeing students turning out to be the largest loan defaulters. Students from the southern states of Kerala and Tamil Nadu are the ones who are giving bankers sleepless nights, with the latter leading the defaulters list.

The figures speak for themselves. As on July 21, 2015, the total exposure of all banks to education loans was Rs 64,900 crore, according to RBI data. On an average, banks face an 8% default on this portfolio – that is Rs 5,192 crore.

Public sector banks are the worst-hit, as they are mandated by the government to give collateral-free loans. Private banks do not extend education loans. Bankers say moves are afoot to take collateral from the two southern states.

For the largest bank, State Bank of India (SBI), the default rate is 5%. The SBI’s default rate for its home loans is less than 1%. Even in the other portfolios of the bank, the default rate is about 3-4%.

For Bank of Baroda, the default rate on student loan is as high as 8.2% on a portfolio of Rs 2,100 crore. Its overall retail loan default is much lower, at 2.4%, and the home loan defaults is 1.64%. The same rates are replicated at most banks, with the Union Bank of India reporting a default rate of 6.5% and Canara Bank 8%. State Bank of Travancore, which is headquartered in Thiruvananthapuram, is affected the most, with a default rate of 12%.

A senior SBI official said: “Repayment is better in cases where borrowers are settled abroad as they generally get good employment and are able to repay their dues. Also, such loans are backed by collateral security. Students are very mobile. They move away from their place of study and it becomes very difficult to trace them. So, now we are insisting on PAN/ Aadhar details of the borrower/ co-borrower. In addition, we are ensuing that the names of defaulters do appear in the CIBIL database.”

All public sector banks are mandated to run the Student Loan Scheme, based on the Model Education Loan Scheme of Indian Banks’ Association (IBA). Under this model, loans up to Rs 4.5 lakh are extended without any collateral security, with just a co-borrower around. For loans above Rs 4.5 lakh and up to Rs 7.5 lakh, banks seek third-party guarantee. For loans above Rs 7.5 lakh, students need to submit collateral security. Delinquency is highest in the bracket up to Rs 4.5 lakh

“Tamil Nadu leads the default list, followed by Kerala, Andhra Pradesh and Odisha. These states have management courses and students are unable to secure jobs that will take care of their EMIs,” a senior Bank of Baroda official said. The bank has not kept any limit on its education loans.

According to a Union Bank of India official, “About 35% of the bank’s Rs 3,200 crore portfolio is lent to the southern states, where the maximum defaults occur. Loan requests are the highest from these states and we do not refuse education loans.”

Source: http://goo.gl/a47Pbi

NTH :: Education loan default can impact CIBIL score

Harshala Chandorkar | June 4, 2015 18:42 IST | The Hindu


According to CIBIL data, the outstanding education credit, including for study within the country and abroad, stood at Rs. 63,800 crore as on March 31 this year.

Non-repayment of education loan can now affect one’s credit score, a top official of Credit Information Bureau (India) Ltd (CIBIL) has said.

“The education loans have to be paid once one completes his/her course and gains employment. Also, like any other loans and credit cards, education loans are also reported to CIBIL and get reflected in the borrower’s CIBIL Report and impact the CIBIL Trans Union Score,” said CIBIL Senior Vice President Consumer Services and Communications, Harshala Chandorkar.

CIBIL Trans Union Score is a key parameter relied on by banks while processing loan applications.

According to CIBIL data, the outstanding education credit, including for study within the country and abroad, stood at Rs. 63,800 crore as on March 31 this year.

The data released by CIBIL throws significant light on education loan trends in the country.

While the demand for educational loan is need based, the number of new loan accounts opened in calendar year are almost same over the last five years, it said.

Noting that the third and fourth quarters of each calendar year witness a spurt in education loans, the data says about 1,30,000 education loan accounts were opened in the fourth quarter of 2014.

However, the average sanctioned amount continues to grow over time, it added.

Average sanctioned amount in fourth quarter of 2014 was Rs 6 lakh, while in fourth quarter of 2013 it was about 4.5 lakh. In recent period, loans with amount less than Rs 1 lakh has reduced below 10 per cent of total sanctions while loans with ticket size/amount of more than Rs 5 lakh have gone up to almost 30 per cent of the total sanctions.

In fourth quarter of 2014, loans of ticket size of more than Rs 5 lakh were around 30 per cent of total sanctions while in fourth quarter of 2012, loans of more than Rs 5 lakh comprised about 22 per cent of total sanctions,” CIBIL said.

It says delinquency on education loans has decreased over the past year.

“Delinquency for 90+ days amount overdue was around 3.50 per cent in fourth quarter of 2013 which has lowered to 2.70 per cent in fourth quarter of 2014,” says the data.

Stating that bad loans from education segment are very high, the Reserve Bank’s Deputy Governor R. Gandhi had asked CIBIL and banks to “counsel” the youth on good credit behaviour during the CIBIL Trans Union Annual Conference in March, CIBIL said in a release.