Taxation Aspects in India: Prize Money, Rental Income, and Education Loans

Prize money is taxable under the head ‘Income from Other Sources’. It is taxed at a flat rate of 30% (excluding applicable surcharge and cess) under Section 115BB and no expenditure or allowance can be claimed against such income. Accordingly, even if your total income for FY 2025-26 is Rs 20 lakh including business income, the prize money would be taxed separately at the special rate of 30%. Further, any tax deducted at source (TDS) on the prize money should be appropriately claimed as a tax credit while computing the final tax liability for the relevant financial year. Rental income from a commercial property is taxable under the head ‘Income from House Property’ provided you are not carrying on a business of renting properties as a commercial activity. For computing your income from house property, the following deductions are available: Municipal taxes actually paid during the year; standard deduction of 30% of the rental income in lieu of repair, maintenance or other expenses; interest on borrowed capital, if any. When you take an education loan for your son’s higher education, you can claim a tax deduction under Section 80E of the Income Tax Act. The deduction is available only on the interest portion of the education loan, not on the principal repayment. There is no upper limit for the amount you can claim on the interest paid. The loan must be taken from a financial institution or an approved charitable institution. Loans from family members or friends are not eligible for this deduction. You can claim the deduction for a maximum of eight consecutive years starting from the year in which you begin repaying the loan interest, or until the interest is fully repaid, whichever is earlier. Higher education means any course of study pursued after passing the senior secondary examination.