The government of India allows Income Tax Deduction under Section 80C and Section 80E. Tax Deduction under Section 80C is allowed for payments made by self and deduction under Section 80E is allowed for Education loan.
Tax Deduction on Tuition Fees under Section 80C
Section 80C of the Income Tax Act has provisions for tax deductions on tuition/education fees paid by a parent towards educating his/her children. Taxpayers can avail deductions to a tune of Rs 1.5 lakh under Section 80C with other investments also eligible for this rebate. Parents can claim the tuition fee paid by them towards their children’s education as deductions, ensuring that they save tax even if they don’t have other tax saving instruments. Parents can claim the actual fee paid by them in a particular financial year.
Tuition Feed Eligibility for Tax Deduction under Section 80C
Taxpayers who wish to claim tax deduction on tuition/education fee need to ensure that they satisfy the following criteria.
Individual Assessee: Tax benefits on tuition fee can be availed only by individual taxpayers, with Hindu Undivided Families or corporates not eligible for deductions.
Limit: The maximum deduction permitted under Section 80C is Rs 1.5 lakh per financial year, with deductions eligible only for two children per assessee. If both parents are taxpayers, then they can claim deductions for 4 children. An individual taxpayers cannot claim the fee paid towards educating more than 2 children as deduction.
Child Education only: Deductions are permitted only to the extent of tuition fee paid towards educating the children of a taxpayer. Fees paid towards educating anyone else, including himself/herself or a spouse cannot be claimed as deductions.
Courses: One can claim deductions on the tuition fee paid towards full time courses only. This includes school fees, fees for graduation or post-graduation courses. Fees paid for part time courses cannot be availed as deductions.
Affiliated: The school, college or university in which a child studies should have necessary affiliations.
Payments not eligible for Tax Deduction
There are multiple financial components when it comes to educating your child, right from tuition fee, cost of books and materials, uniforms, building fee, etc. Most educational institutes charge extra amounts for additional services, with their cost running into thousands. As per provisions of Section 80C, only the actual tuition fee paid in a year can be claimed as deductions. Additional costs like donations, private coaching, etc. are not eligible for deductions. Other exemptions include hostel fees, library costs, transportation charges, etc. Similarly, one cannot claim tax deductions on distance education courses.
Tax Deduction on Tuition Fees under Section 10
Section 10 of the Income Tax Act offers an additional tool for taxpayers to save some of their tax. Under this provision, salaried individual taxpayers are eligible to save tax to the tune of Rs 100 per month per child. This amount can be availed for a maximum of 2 children per taxpayer, which means that an individual taxpayer is eligible for tax exemptions of Rs 200 per month. This amount can be claimed as exemption only in the financial year in which the fee was paid. In addition to this exemption, one can also claim exemption on hostel costs on his/her children. This hostel allowance is capped at Rs 300 per month per child, subject to a maximum of 2 children.
Tax benefit on Education fee can be availed only by the individual assessee with Hindu Undivided Families or corporate not eligible for deductions.