“In the eyes of the law, it’s not who pays — it’s who owns.”
(Financial help is emotional; tax benefits are transactional.)
Introduction
In today’s world, family support often extends to financial help — especially when it comes to big loans like home loans or education loans. But a common question arises:
If you are paying EMIs for someone else’s loan (like your parents or sibling), can you claim tax benefits?
The short answer is — it depends! Let’s dive deep into this often-misunderstood topic and find out how the tax rules actually work.
1. Understanding the Basic Rule
The Income Tax Act provides tax benefits on home loan and education loan repayments under different sections:
- Home Loan:
- Section 80C for principal repayment (up to ₹1.5 lakh)
- Section 24(b) for interest repayment (up to ₹2 lakh)
- Education Loan:
- Section 80E for interest repayment (no limit)
BUT — you must fulfil two key conditions:
- You must be a borrower (either primary or co-borrower in the loan agreement).
- You must be the owner (in case of a home loan) or the student/self (in case of an education loan).
If you just pay EMIs without being officially linked to the loan or ownership, you may not be eligible for tax benefits.
2. Can You Claim Tax Benefits When Paying for Parents’ Loan?
Home Loan for Parents:
- If you are not the owner of the property (parents are), even if you pay the entire EMI, you cannot claim tax benefits.
- Ownership + loan responsibility both must be there to claim deduction.
Example:
If your father has taken a home loan for a property in his name, and you are paying his EMIs, you cannot claim 80C/24(b) deductions because you don’t own the house.
Education Loan for Parents:
- Under Section 80E, you can only claim deduction if the loan is taken for higher education of:
- Yourself
- Your spouse
- Your children
- (or a legal ward, under special conditions)
- Parents’ education loan EMIs paid by you do not qualify for 80E benefits.
3. Can You Claim Tax Benefits When Paying for Sibling’s Loan?
Home Loan for Sibling:
- Same rule applies:
- If your brother/sister is the owner and you are just paying EMIs, no deduction is allowed for you.
- Even co-borrower status alone won’t help unless you also have ownership rights.
Education Loan for Sibling:
- Education loan deduction (80E) is strictly limited to your own education, your spouse’s, or children’s.
- Paying for a sibling’s education loan does not make you eligible for deduction under 80E.
4. Smart Planning Tips to Claim Benefits
If you wish to help financially and claim tax benefits too, plan smartly:
- Be a co-borrower + co-owner from the beginning for home loans.
- If helping in education, prefer to take the education loan in your own name for your child’s or spouse’s study.
- Gift money legally to parents/siblings, let them pay EMIs — it keeps taxation cleaner and reduces confusion.
5. Real-Life Example: Why This Matters
Case Study:
Rohit pays ₹25,000 per month for his father’s home loan. He thought he could claim ₹2 lakh deduction under Section 24(b).
Reality: His father is the sole owner, Rohit is not on property documents.
Conclusion: Rohit cannot claim any home loan benefit despite paying EMIs.
Had he been co-owner and co-borrower, he would have saved big tax!
Conclusion: Pay Smart, Plan Smart!
Helping your family is noble — but when it comes to tax benefits, emotions don’t count, only documentation does.
If you are only paying EMIs without being a legal owner or borrower, unfortunately, you cannot claim any tax deductions.
Always ensure you have your name on loan papers and ownership documents if you plan to claim tax benefits.
For education loans, remember: parents, siblings, friends — not covered under 80E!
Proper planning can save lakhs of rupees in tax over time.
Think ahead, document wisely, and stay financially smart!
“You’re already doing the right thing by supporting your family — now do the smart thing by structuring it right and claiming what you rightfully deserve.”
****
Author: Tarun Sharma -Finance Analyst | Writer | Educator – Email: tarunsharma04004@gmail.com
very nice article providing legal ways to plan the taxes.