Should you prepay your education loan before the repayment period of 8 years?


I took an education loan of Rs 13 lakh at 8.6% in 2015. The outstanding now is Rs 8 lakh. I opted for a repayment period of eight years as the tax benefit on education loans is for eight years only. I have been claiming income tax exemption on the interest component of close to Rs 80,000 every year. Should I prepay my loan or continue? I am in the 30% tax bracket.
Amit Maheshwari Partner, Ashok Maheshwary and Associates
 replies: Deduction on interest on loan taken for higher education can be claimed under Section 80E of the Income Tax Act. The deduction is allowed for eight years or until the interest is paid in full, whichever is earlier. Further, there is no upper limit on claiming this interest deduction. Hence, considering that you would not be able to reap any tax benefit for this interest payment beyond the eighth year, you can prepay the same within the next four years.

A flat is owned jointly by three people. While two of them actually paid for the flat, the third name was added in the sale agreement for the sake of convenience. Does the third holder have any right to the property? Can he leave a share of it to someone else?
Adhil Shetty CEO, BankBazaar
 replies: Broadly, all joint holders have a share in the property. The exact right would be determined by the type of co-ownership specified in the sale agreement. Joint ownership can be of two types: tenants in common and joint tenants. If it is tenants in common, then each owner has a separate and distinct share in the property. All owners can use the entire property, but every co-owner has a specific share in the property.

The specifics would be mentioned in the ownership agreement. Moreover, on the death of one of the joint owners, the interest in the property would not pass to the co-owners, but to the person named in the will of the deceased. In case of joint tenancy, the property is owned by all three joint holders equally. If a co-owner dies, their interest automatically passes on to the other surviving joint tenants.