How you use a loan determines tax benefit

Interest paid on even a loan against property is tax deductible if you can prove that the loan was utilised for your child's higher education

My friend Kartik had a query about the education loan of around Rs 1 crore he planned to take to finance his daughter’s overseas education.

I was curious to know why Kartik planned to take an education loan when he could easily pay for her overseas education out of his own pocket. What had attracted Kartik to the idea of taking a loan was that the entire interest paid on an education loan is fully tax deductible, without any limit, under Section 80E of the Income-Tax Act. Kartik pays tax at very high rates. Hence, his effective interest cost (after taking