Tax Benefits On Children Education Allowance, Tuition Fees & School Fees

Last Updated at: October 10, 2019
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Tax Benefits On Children Education Allowance, Tuition Fees & School Fees

As a matter of policy, the government has a provision to help parents in their tax liabilities by adding advantage of the school-fee incurred by them. Tuition fees incurred by the parents in sending their kids to school is available to claim the tax benefit under Section 80C of the Income Tax Act, 1961. However, there is a limit to the annual overall limit of tax benefit that can be availed, fixed at Rs. 1.5 lakh a year. The benefit it offers is that it is not calculated in the annual calculation of the total gross income, thus considerably affecting the tax liability.

At the very onset, it must be clarified that the scope and purview of Section 80C are limited to individual assessees and not HUFs. The assessee claiming the deduction must be a parent, guardian or sponsor. Also, there is a limit as to per parent, how many children’s tuition fee is covered. Deduction under this section is available for tuition fees for two children. Therefore, in cases where the assessees have more than two children, then they can only claim benefits for any two children and not more. The advantage here is that per parent two children are allowed, therefore for a couple, a total of 4 children’s tuition fee can be exempted. 

What are the exemptions provided under Section 80C?

The following exemptions are provided to an individual employed in India, for the expenses incurred as per Section 10(14) of the Income Tax Act, 1961

  • Children’s Education Allowance: INR 100 per month per child up to a maximum of 2 children.
  • Hostel Expenditure Allowance: INR 300 per month per child up to a maximum of 2 children.

Other components of fees like development fees and transport fees are not eligible for deduction under Section 80C. However, the reach of the said provision contained in Section 80C of the Income-tax Act, 1961 is that it does not apply to expenditure incurred for self-study, It means that is the assessee has incurred expenditure in payment of his own tuition fee, he cannot claim a tax exemption or deduction.

File Your Income Tax Returns

What are the other requirements to claim deduction under Section 80C of the Income Tax Act, 1961?

  • The Deduction is not subject to the class attended by the child. The only requirement is that the institution, college or university must be situated in India, irrespective of its affiliation to any foreign university. 
  • The deduction is available only for full-time education courses that include a nursery school, creches and playschools.
  • The deduction is available only on actual payment and not on a payable basis. For instance, if the fee is paid by the parent in April 2019 for the quarter ending March 2019 then the fee paid will be eligible for a deduction in the FY 2019-20.
  • The fee can also be claimed by an Unmarried person/ divorced parent.
  • An adopted Child’s school fees are also eligible for deduction.

When can deduction be denied under Section 80(C)

The provision does not extend itself to a deduction  for the payment made towards the following category of payments made: 

  • Development fees, donation or charity, Private Coaching centre, other expenses such as hostel expenses, mess charges, library charges or similar payments.
  • The deduction is not available for payment made towards part-time courses.
  • The deduction is not available towards payment made for school fees of self, spouse, brother or sister, father or mother or any other relative.
  • Fees paid to a foreign university situated outside India are not eligible for this deduction.

How to claim deduction under Section 80C?

One can simply claim the deduction by submitting the receipt issued by the schools for the payment made during the financial year to their employer. This should be submitted along with the proofs of investments at the end of the financial year along with the 12BB form. If the assessee claiming the deduction is someone other than a salaried employee, the deduction has to be claimed under Schedule VI-A. It needs to reflect the amount of fees paid under section 80C on the income tax return.

Tax Benefits On Children Education Allowance, Tuition Fees & School Fees

925

As a matter of policy, the government has a provision to help parents in their tax liabilities by adding advantage of the school-fee incurred by them. Tuition fees incurred by the parents in sending their kids to school is available to claim the tax benefit under Section 80C of the Income Tax Act, 1961. However, there is a limit to the annual overall limit of tax benefit that can be availed, fixed at Rs. 1.5 lakh a year. The benefit it offers is that it is not calculated in the annual calculation of the total gross income, thus considerably affecting the tax liability.

At the very onset, it must be clarified that the scope and purview of Section 80C are limited to individual assessees and not HUFs. The assessee claiming the deduction must be a parent, guardian or sponsor. Also, there is a limit as to per parent, how many children’s tuition fee is covered. Deduction under this section is available for tuition fees for two children. Therefore, in cases where the assessees have more than two children, then they can only claim benefits for any two children and not more. The advantage here is that per parent two children are allowed, therefore for a couple, a total of 4 children’s tuition fee can be exempted. 

What are the exemptions provided under Section 80C?

The following exemptions are provided to an individual employed in India, for the expenses incurred as per Section 10(14) of the Income Tax Act, 1961

  • Children’s Education Allowance: INR 100 per month per child up to a maximum of 2 children.
  • Hostel Expenditure Allowance: INR 300 per month per child up to a maximum of 2 children.

Other components of fees like development fees and transport fees are not eligible for deduction under Section 80C. However, the reach of the said provision contained in Section 80C of the Income-tax Act, 1961 is that it does not apply to expenditure incurred for self-study, It means that is the assessee has incurred expenditure in payment of his own tuition fee, he cannot claim a tax exemption or deduction.

File Your Income Tax Returns

What are the other requirements to claim deduction under Section 80C of the Income Tax Act, 1961?

  • The Deduction is not subject to the class attended by the child. The only requirement is that the institution, college or university must be situated in India, irrespective of its affiliation to any foreign university. 
  • The deduction is available only for full-time education courses that include a nursery school, creches and playschools.
  • The deduction is available only on actual payment and not on a payable basis. For instance, if the fee is paid by the parent in April 2019 for the quarter ending March 2019 then the fee paid will be eligible for a deduction in the FY 2019-20.
  • The fee can also be claimed by an Unmarried person/ divorced parent.
  • An adopted Child’s school fees are also eligible for deduction.

When can deduction be denied under Section 80(C)

The provision does not extend itself to a deduction  for the payment made towards the following category of payments made: 

  • Development fees, donation or charity, Private Coaching centre, other expenses such as hostel expenses, mess charges, library charges or similar payments.
  • The deduction is not available for payment made towards part-time courses.
  • The deduction is not available towards payment made for school fees of self, spouse, brother or sister, father or mother or any other relative.
  • Fees paid to a foreign university situated outside India are not eligible for this deduction.

How to claim deduction under Section 80C?

One can simply claim the deduction by submitting the receipt issued by the schools for the payment made during the financial year to their employer. This should be submitted along with the proofs of investments at the end of the financial year along with the 12BB form. If the assessee claiming the deduction is someone other than a salaried employee, the deduction has to be claimed under Schedule VI-A. It needs to reflect the amount of fees paid under section 80C on the income tax return.

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A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.