Tax benefits on child's education fees

Tax benefits on child’s education fees. All you need to know

The Indian government offers tax benefits to encourage a higher literacy rate and child education in India. The tuition fees paid by a parent for their children are excluded from income tax and are subject to various benefits that you can avail of.

Parents can enjoy tax benefits on their child’s education fees and additional deductions that are permitted for the same under section 80C of the Income Tax Act.

Deduction for tuition payments received under section 80C

The tuition fees paid to a university, college, school, or other educational institution may be claimed by parents. Transport and development fees, among other fee components, are not deductible under Section 80C.

Together with the deduction for insurance, provident fund, pension, etc., the maximum deduction for payments made toward tuition fees can be recorded for up to Rs 1.5 lakh in a fiscal year.

Eligibility of tuition fees for Section 80C deductions

People who pay any amount or fees for their children’s education may be eligible for a tax deduction under Section 80C if they meet the requirements listed below:

  • Only an individual parent, guardian, or sponsor is qualified for this deduction.
  • A limit of 2 children per person is eligible for the deduction. Therefore, a maximum of 4 children’s deductions, or 2 for each parent, may be claimed.
  • Every financial year, each parent may deduct up to Rs. 1.50 lakh individually. Please be aware that the parent’s total deductions under Sections 80C, 80CCC, and 80CCD cannot exceed INR 1,50,000.
  • Regardless of the class the child attends, a deduction is possible. Even if it is partnered with a foreign university, the institution, college, or university must be located in India.
  • Only full-time education programs that have a nursery school, creche, or play school are eligible for the deduction. As an illustration, the amount that the parent pays in April 2021 for the quarter ending in March 2021 will be eligible for a deduction in the fiscal years 2021–22.
  • A parent who is divorced or unmarried may also claim the tax benefits.
  • School costs for an adopted child are also deductible.
Tax benefits on child education fees

Non-eligibility of payments towards tuition fees

  • Payments made for development fees, charitable contributions, private coaching centers, or other expenses like mess fees, library fines, or similar payments are not eligible for the deduction.
  • Paid tuition for part-time courses is not eligible for the deduction.
  • The deduction cannot be used to pay for the education of yourself, your spouse, your brother or sister, your mother or father, or any other relative.
  • This deduction does not apply to tuition fees paid to foreign universities that are located outside of India.

Additional read: Ways to save lakhs for child education

Exemption for hostel and education expenses for children

Employees in India are given the following exemptions*:

  • Children’s Education Allowance: Up to two children are eligible for a monthly allowance of ₹100 each.
  • Allowance for Hostel Expenditure: ₹300 per month for each child, up to a maximum of 2.

(*Only in cases when expenses are made in India following Section 10(14) of the Income Tax Act.)

How to claim the tax benefits on your child’s education fees?

Parents can submit the school’s receipt for the fee paid throughout the fiscal year to their employer. Before filing the investment proofs at the close of the financial year, parents must additionally demonstrate it in form 12BB.

You must prove the number of fees paid under section 80C on the income tax return to claim the deduction for a person who is not a salaried employee under the VI-A schedule.

The children’s education allowance, which is a part of the wage structure, and the fees paid for the children’s tuition are both separate deductions, it is vital to note this. As a result, these may be claimed individually up to the permitted maximum (given above) by the rules of the Indian Income Tax Act, 1961.

You should utilize these tax benefits to reduce the cost of your children’s education and lower your overall tax burden. By taking advantage of these exemptions, you can lower your tax liability and use the money you save to invest further and create a fund for your children’s higher education.

Therefore, as a way of increasing literacy rate and awareness, the Indian government has provided an opportunity for everyone to educate our children by exempting parents from paying taxes when it comes to our children’s tuition fees, but of course, it has its limitations.

This is an attempt at national development and for us to reach new successes and explore what we can do with education.

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