6. Interest on Education Loans

Under Section 80E, deductions from taxable income can include interest paid on educational loans but not the principal. Till recently, interest paid on educational loans was allowed as a deductible for students. That benefit now extends to parents, spouses and legal guardians but not when taken on behalf of siblings or relatives. Vocational courses and higher education is covered. The country of education is not specified in the law.

The benefit is valid for up to eight years from when the interest is first paid and the loan must be from a recognized financial institution or approved charitable institution.

Tuition fees for two children up to 1,00,000 can be deducted. However, coaching classes, transport fees and building funds are not eligible.

7. Interest on Second Home Loan

The tax code seems biased against single home owners. If you have one home, the maximum benefit you can claim is 1,50,000 per year against the home loan interest you have paid under Section 24b. However, if you have a second home, the deduction from your gross income can be up to the interest you pay. The second home is automatically deemed to be rented out and that rental income has to be listed as earnings.