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

By Mohammed S Chokhawala

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Updated on: Jul 29th, 2024

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2 min read

Education is one of the most important investments that parents make for their children. However, the cost of school fees and related expenses can be a significant financial burden for families. To alleviate some of this financial pressure and to promote literacy, the government offers a tax deduction on tuition fees paid for children. In this article, we will explore the tax benefits offered on children's tuition fee, the eligibility criteria, and how to claim them.

The tax benefits offered on children's education are as follows:

  • Children's Education Allowance
  • Hostel Expenditure Allowance
  • Tax deduction on tuition fees

Exemption for Childrens' Education and Hostel Expenditure

The following exemption* is provided to a salaried taxpayer in India:

  • 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.

(*Only if expenses are incurred in India as per Section 10(14) of the income tax act)

Deduction on Tuition Fees under Section 80C

A parent can claim a deduction on the actual amount paid as tuition fees to a university, college, school or any other educational institution. Other components of fees, like development fees and transport fees, are not eligible for deduction under Section 80C.
In a financial year, individuals can claim a maximum deduction of Rs 1.5 lakh for payments made towards tuition fees, along with deductions for items such as insurance, provident fund, pension, and others.

Eligibility of Tuition Fees Deduction Section 80C

Persons paying any sum/fees towards the education of their children can claim tax deduction under Section 80C, subject to the satisfaction of certain conditions, which have been enumerated below:

  • Who is eligible: This deduction can be claimed only by a parent. An adopted child's school fees is also eligible for deduction.
  • Number of Children: Each parent can claim a deduction up to Rs 1.5 lakh for maximum 2 children separately. Therefore, if both parents are taxpayers, they can claim deductions for a total of 4 children.
  • Maximum Limit: Rs 1.50 lakh every financial year. 
    Please note that the aggregate deduction amount under Sections 80C, 80CCC and 80CCD is restricted to Rs 1,50,000 for a taxpayer.
  • Maximum Age: No maximum age.
  • Tuition fee meaning: Only payment made towards the full-time education of the child. However, all these payments will not be categorised as tuition fees: Development fees, donation or charity, private coaching fee, other expenses such as hostel expenses, mess charges, library charges or similar payments.
  • Institution: Any university, college, school or other educational institution situated in India.
  • Mode of Deduction: The deduction is available only on actual payment and not on payable basis. For instance, if the fee is paid by the parent in April 2024 for the quarter ending March 2024, then the fee paid will be eligible for a deduction in FY 2024-25.

Non-eligibility of Tuition Fees Deduction Section 80C

  • The deduction is not available for payment 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.
Did-You-Know

How to Claim tax Exemption for Children’s Education Allowance and Tuition fee Deductions?

Individual taxpayers can claim income tax exemption for children's education under Section 10(14) and tuition fees deduction under Section 80C.

For Salaried Individuals

Salaried individuals must submit the fee receipt issued by the schools or institutions to their employer by year end at the time of investment proof submission. They must also declare it in Form 12BB.

For Non-Salaried Individuals

A person who is not a salaried employee can claim only the tuition fee deduction under the VI-A schedule under Section 80C. The non-salaried taxpayers are not required to submit any bill while filing ITR. Nevertheless, they should keep the receipts as evidence to back their claims.

It is important to mention here that children's education allowance, which is part of the salary structure, and tuition fees are both different deductions. Therefore, these deductions can be claimed separately as per the limits discussed above.

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Frequently Asked Questions

Can I claim the children's education deduction if I have adopted a child?

Yes, the adopted child's school fees are also eligible for deduction.

How to save tax other than section 80C?

Apart from 80C, various other provisions allow deductions to taxpayers as follows:

  • 80D- for medical insurance premium for self, spouse & dependent parents
  • Section 24- Interest deduction on housing loans up to Rs 2 lakh
  • Section 80EEB- interest payment made towards a loan taken for the purchase of an electric vehicle
  • 80G- donations to charitable institutions.
  • 80GG-if your income does not include the HRA component, you can claim a rent deduction under 80GG
  • Section 80TTA- deduction up to Rs 10,000 for interest received in saving bank account
  • Section 54 -54F – Capital gain exemption for capital gains
What is the tuition fee under 80C?

A taxpayer can claim a maximum deduction of Rs 1.5 lakh on the tuition fees paid for up to 2 children.

What do you mean by 80C deduction under chapter VI A?

If a taxpayer makes certain eligible investments or expenditures under Chapter VI A, the income tax department permits a reduction of their taxable income. One such provision, 80C, allows for deductions on investments made in various instruments such as PPF, EPF, LIC premium, equity linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for the purchase of property, Sukanya Samriddhi Yojana (SSY), National Saving Certificate (NSC)Senior Citizen Savings Scheme (SCSS), ULIPtax saving FD for 5 yearsInfrastructure bonds, etc.

Is there any age limit for claiming a children education allowance?

No, there is no age limit for claiming children education allowance under the Income Tax Act.
However, the Children Education Allowance Scheme (CEA) introduced for Central Government employees mentions the age limit. Please note that this scheme is unrelated for tax purposes. The Income Tax Act has established separate criteria for providing tax benefits.

If an employee is earning Children Education Allowance of Rs.150 for his elder son & Rs. 80 for his younger son, will he be able to utilise the excess of Rs.20 available under the latter circumstance to set-off Rs.50 that is taxable under the first circumstance?

No. Exemption of Rs.100 for two children shall be claimed independent of each other. If there is any leftover amount in the exemption limit of one child, it cannot be utilised to set-off the other.

Is education allowance and tuition fee deduction same?

No, education allowance is an exemption upto ₹ 100 per child (maximum of two children) under section 10. However, tuition fee deduction can be claimed upto ₹ 1.5 lakh for payments made to tuition fees under section 80C of the income tax act.

Is Tuition Fees part of Section 80C Deduction?

Yes, the deduction limit of Rs. 1,50,000 under Section 80C includes the tuition fees paid by parents for their children's education.

About the Author

I'm a chartered accountant, well-versed in the ins and outs of income tax, GST, and keeping the books balanced. Numbers are my thing, I can sift through financial statements and tax codes with the best of them. But there's another side to me – a side that thrives on words, not figures. Read more

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Quick Summary

Tax benefits are offered on children's education in India, with deductions for tuition fees and allowances like Children's Education Allowance and Hostel Expenditure Allowance. Eligibility criteria and claiming procedures for these tax benefits are outlined. Individuals can claim a maximum deduction of Rs 1.5 lakh for tuition fees per financial year per child. The deduction is available only for full-time education at institutions in India, with specific exclusions.

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