I am welcoming all the Students and their parent and guardians who have taken Student or Education loan or proposing to avail the same from any bank in India for their child's higher studies in India
or abroad to my this post and happy to inform all of you that you can
get Income Tax rebate. It will be great help to those who are not aware
of this benefit. Many of us may not be aware of the fact that the Tax
exemption on the interest amount paid for the education loan can be availed. This can reduce the overall burden of cost on education or student loan.
You
can refer to the section 80 E of Income Tax Act where detailed about
this exemption has been explained. Once you have taken the education loan, you can claim deduction under section 80E of Income tax Act for the sum of interest paid on the loan amount. The amount of interest paid is eligible for deduction and you can deduct the whole interest from your taxable income.
Previously
there was a restriction on the tax benefit to be deducted from the
income. Only Rs.40,000.00 per year or the total amount including the
principal and the interest paid during the year, which is less, was allowed as a tax benefit.
But
the tax deduction is only available, if the purpose of loan is to
pursue higher education to complete full time studies in graduate or
post graduate course.
This tax benefit on education or student loan are only available when you start the repayment and they are available only upto eight years. For example, if your loan repayment exceeds eight years, you cannot claim for deduction beyond eight years.
Hence it is wiser that the education or student loan is repaid within eight years. Unless the loan
amount is very high and it is very hard to afford a high amount of
equated monthly installment (EMI), one should not opt for education or student loan with longer period.
It may be noted that, this benefit is only available if the loan is taken from a financial institution or from a bank. Loan taken from friends or relatives will not be considered for tax benefits.
As
per the provision in section 80E of Income Tax Act, any amount paid by
you in the previous year, out of your taxable income, by way of repayment of loan,
taken by you from any financial institution or any approved charitable
institution for the pupose of pursuing higher education or interest on such loan, provided that the amount which may be so deducted shall not exceed Rs. 25,000.00.
The deduction mentioned in sub-section(1) shall be allowed to calculate the total income
in respect of the initial assessment year and seven assessment years
immediately after the initial assessment year or until loan referred to
in sub-section (1) together with interest there on is paid by the assessee in full, whichever is earlier.
Most of us want to open PPF account, but keep postponing it just because we don’t want to take action. Most of the people want to open their PPF accounts with the most trusted bank in India , which is State Bank of India . Let us see 3 easy steps of opening a PPF account in SBI branch, the whole process does not take more than 30-45 minutes if you prepare in advance and go with all the documents required and there are no blockings in between . The biggest advantage of opening the PPF account with SBI is the online transaction facility you can use to deposit in your PPF account online and dont have to rush to the branch every now and then .
3 Steps of Opening SBI PPF Account
1) Choose a SBI branch which is authorized to go government business.
Usually any ‘large’ branch with lots of customers should do. Usually newer and smaller branches may not have this clearance.
One doesn’t need to have a Saving Bank account in that branch. Locate your nearest SBI Branch using this 2) Procure and submit account opening form and Identity/address Proofs
It would only 3 minutes to fill. Choose a nominee and get a witness signature. Now you have to submit anyone of following Proofs.
Passport
Pan card
Driving license
Voter id
Ration card
Two Passport Size Photographs
Any government issued identity or address proof should work. Keep originals of proof in hand for verification if needed. Thats it. The bank should now be able to open the account. Usually it may take about 20 minutes or so. 3) Get PPF Passbook
A pay-in slip needs to be filled and the initial subscription needs to be credited into your account. A passbook similar to a Saving Book passbook will be issued with your photo affixed and the nominee’s name stated. PPF rules can be found on the back.
This is all , your PPF account is opened now .
How to Link your Online SBI Account to SBI PPF account for Online Transaction
If you have a online SBI account, you can add the PPF account as a third party account for transfer. As mentioned above the PPF account can be in any SBI branch. There are no processing charges for transfer. When you do this online for the first time, go to the bank and update your PPF passbook and check if the transaction has occurred correctly. This has to be done since you cannot look at the amount in the PPF account as yet in SBI. This is a major drawback of SBI-PPF (and post office) accounts.
A standing instruction maybe issued from your online account for auto-credit to PPF. However there are two disadvantages
Rarely there maybe system failures and the standing instruction may not get honoured. So you need to check if it has occurred.
You cannot subscribe a lower amount if you need the cash for emergency use (this situation wont arise if you had an emergency fund )
You need to go to the bank to cancel the standing instruction .
There are only 12 credit transaction allowed per year. So take care of this before issuing a standing instruction.
How to Transfer your PPF account from One Bank to Another
Go to the branch where you want to transfer your PPF account and deposit an application with your PPF passbook
takes 10-15 minutes
How to Submit Proof for Tax
Take xerox of the PPF passbook updated with all transactions and get it attested in the branch. (not sure if the attestation is really required) [ Update 5th Feb , thanks for Mithilesh ]
Other points to Consider
Subscriptions must be made before the 5th of every month for the amount to taken into account for interest calculation for that month. If you want to open an account in the name of a minor in addition to yours the total limit of subscription is Rs. 70,000/-. The total tax benefit is also the same. This is a new rule and is not yet printed in the PPF passbooks! See Here , Here and Here for more detail An excellent ppf calculator can be found here
Comments please , Are you going to open your PPF account this year ? Do you feel PPF account should be opened at Post Office ? Why ? Note : The same procedure will be applicable for most of the other nationalised bank , but it can differ a little bit . Credits :Thanks for Nisha (Banker) for providing these Steps and I thank him for the contribution .
Do you want to invest in your PPF account online without going to the bank physically? If YES, then there is a good news for you. You can transfer to your PPF account online via netbanking. Yes its possible. Just like to transfer money to some bank account by adding him as third-party beneficiary, you can add your PPF account to your bank account as beneficiary and then transfer the money to PPF account anytime with a click ! .
Till now I came to know that this was true for ICICI bank and SBI bank, but I am sure this would be true for all the banks which allow netbanking transfer to third-party. Please note that this online transfer is possible only if the PPF account is at SBI , if it is opened at Post Office , then it would not be possible, because only SBI is authorised to get online payments for PPF. Many people have their PPF , spouse PPF and children PPF account, they can add any number of PPF accounts for online payment.
Steps for ICICI Bank
I am mentioning the steps for ICICI Bank first. Step 1 : Add PPF account as Beneficiary Account
The first step is to add your PPF account to your Bank account as third-party so that you can do a money transfer to them. I am using ICICI account screenshots, but all the steps must be same for other banks also.
Step 2 : Choose the SBI branch Address
Next step is to choose the exact location of the BANK where the account was open . Note that if you opened a PPF account at a SBI branch where netbanking is not available , it will not be listed.
The best thing about have the bank account and PPF account linked is that you can also view the PPF details and balance at a single place . Step 3 : Add your PPF account as the Payee Account number
The last step is to add your PPF account as the Payee Account number and then click on the confirmation link . In ICICI you will first get an activation code which you will have to put to activate the account for first time .
Once you have completed these 3 steps you can see your PPF account as the 3rd party account where you can transfer the money just like you send it to any account.
Steps for State Bank of India (SBI)
Option 1 : If your PPF account and Bank account is at same branch
Incase you have your PPF account and SBI bank at the same branch, then you can see your PPF account already linked with your Bank account and you can transfer the money. Prasoon shares his personal experience
I already had an account in SBI, New Delhi. I went to SBI, Hyderabad for opening a PPF account. They asked for existing SBI account number, which I provided. Also, I submitted PAN card and Bank statement copy as proof documents. It took some 15-20 minutes to get a PPF passbook.
Now a pleasant surprise -
When I came back home and logged with my saving account user ID, I was able to see my PPF account under account section. I was able to see transaction I have done till then.
Also, there is no need to add PPF account as Third Party in this case. As the PPF account appears as separate account, I can transfer amount using fund transfer (not third-party transfer). Good thing is that, this transaction is real-time and the PPF account gets updated at the same time. Also, I am able to download statements, just like with normal account.
If you are not able to see the PPF account as “linked account” , then call customer care and ask them to activate it, if that does not work , then try to add your PPF account as the beneficiary account like I explained above . If even that does not work then try to go to your branch and then ask them to link the account to your bank account. Option 2 : If your PPF account and Bank account are NOT at same branch
If your SBI Bank account and PPF account are not in same branch/city , then as the first step you can try to add your PPF account to your Bank account as third-party to do a money transfer. If that does not work then you can go to your Branch and ask them to link your PPF account to your bank account . Mostly this should work.
Steps for Other Banks
Incase you have a netbanking with some other bank than ICICI and SBI bank, then you should try to add your PPF account as third-party beneficiary just like I explained above. Hopefully it should work, try it and let others know if that was successful ?
Note that in some of the banks netbanking , PPF account might get added , but once you transfer hte money in PPF account, it will come bank to your account because it’s not possible to do online from that particular bank, bad luck in that case . You might just open a bank account in SBI same branch where you opened the PPF account and use that account for the money transfer.
But your PPF account is not in SBI ?
Incase your PPF account is with Post Office or a non-SBI bank ,then may be its a great time to transfer your PPF account to SBI account ,all you need to do is submit a form for transfer of your PPF account. It will be one time task , so do it .
How to claim tax benefits
If you transfer the money to your PPF account online then you can do two things . First is to get your PPF passbook updated at your branch about the money transfer , you will get the PPF passbook updated and show it as your proof for claiming tax benefits. The other thing you can do is take the print out of your bank statement which will show the credit of the money to your PPF account. I am not sure but may be this is possible with SBI bank only . You can use this statement as proof to claim tax benefit.
NRI’s should make use of this online transfer facility
I think the best use of this facility can be made by NRI’s , who are already have a PPF account , but could not go to bank branch to invest in PPF and waiting for information like this.
Just try this option with Rs 500
If you are wondering if this whole netbanking will work or not , I can tell you that there are countless number of investors already doing this and I am sure you will hear from other fellow readers that they are already doing this. It would be a great idea to test this by adding your PPF account and then test a transfer of Rs 500 and confirm once that it really got transferred .
Where you looking for information like this ? Will you test this with your PPF account and do a test transfer ! , please update your comments about it in comments section .
Thanks to Jayaprakash for sending me these screenshots and also confirming that he was able to transfer money from his ICICI bank to his PPF account.
State Bank of India provides information on the various Interest rates offered by it on various loans and deposit schemes.
Details of Up-to-date interest rates scheme-wise is given in the sections one could click on to.
SBI now provides your Account Balance and Transaction details over phone round-the-clock. Information on deposits & loan schemes and services also available.
Call 1800112211 (tollfree from BSNL/MTNL)
or
18004253800(BSNL tollfree no.)
Local Head Office/Head of Grievances
Redressal Machinery
In case a customer is not satisfied with the handling of grievance by the Local Head Office, a communication may be sent (enclosing the message sent earlier to Local Head Office) to the
Deputy General Manager (Customer Service), at the Corporate Centre at Customer Service Dept., State Bank of India, State Bank Bhawan, 4th floor, Madame Cama Road, Mumbai-400 021,
Write to us at: PO Bag 28, GPO, New Delhi, 110 001
SBI International Toll Free Numbers for NRI -
Australia - 1800012473 Belgium - 80076562 Canada - 18663284209 Germany - 8001830736 Italy - 800789407 Netherlands - 8000223031 Singapore - 8001012333 France - 800740849 Hong Kong - 800932045 UAE - 80009119005 USA - 18663284209 UK - 08081017633 Bahrain - 80081724 New Zealand - 800449909 Japan - 006633812439 South Africa - 0800982360 Russia - 81080029301012
For SBI ATM-cum-Debit card Related Operations - Toll Free No: 1800-11-2211, 1800-42-53800 or 080-26599990 e-mail: contactcentre@sbi.co.in
For assistance in SBI Internet Banking - Toll Free No: 1800-11-2211 e-mail: inb.customer@sbi.co.in
. You might just open a bank account in SBI same branch where you opened the PPF account and use that account for the money transfer.
