My son completed his MS in the USA after taking an education loan from an Indian national bank. He has started earning in USA, paying taxes as per USA rules. He is planning to send Rs. $5000.00 per month to my saving account at India for repayment of the education loan. I am Govt employee and paying taxes as per Indian income tax rules. My query is that whether the money received from my son to my saving account would be taxable or not?
No, there is no tax to pay on this transfer.
Assuming that the loan is in your son's name, and that the transfer is solely for paying it off, then the transfer is not actually income to you. You are just acting as an intermediary, temporarily holding the money before it is used to pay off the loan.
You may have difficulty if the tax authorities don't believe you, but as long as that is what is really happening, and you have documents showing that you made loan repayments on his behalf for exactly the same amounts he sent, then you should be fine in the long run.
This would of course be easier if your son had his own bank account from which he could repay the loan.
From a India tax point of view, this is a gift to you from your son as such it is not a taxable income. Your son can send you any amount and there is no tax implications in India.
No. A Education loan is not earned income, it is a financal loan that charges him interest. So he does not have to claim taxes on it under the United States tax code.
Even if he gives money to his father, it still is not taxed
IRS Tax Code 970:
Student loans are not technically “income”, and therefore, not taxable as such. which must be repaid—income.
When you take out a student loan, you have to pay the full amount back with interest. Therefore it is never treated as taxable income.
However, when you begin repaying these loans, you may qualify for a student loan interest deduction if your income is not too high and you use the funds only for school-related expenses while in college
Students can rollover (distribute) their education loan money to Members of the beneficiary's family.
For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. 1. Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. 2. Brother, sister, stepbrother, or stepsister. 3. Father or mother or ancestor of either. 4. Stepfather or stepmother. 5. Son or daughter of a brother or sister. 6. Brother or sister of father or mother. 7. Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 8. The spouse of any individual listed above. 9. First cousin.
For the receiver, These aren't taxable distributions
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