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To promote higher literacy rate and the education of children in India, there are a number of tax benefits which a person can make use of for reducing their taxable income. The government of India allows tax breaks and income tax exemption on the tuition fees paid by the individual for their children.
For some salaried individuals, payment of education or school tuition fees for children can be part of their salary structure. Let’s also talk about the additional deductions allowed under section 80C for the same.
Following exemption* is provided to an individual employed in India:
(*Only if expenses are incurred in India as per Section 10(14) of the income tax act)
A parent can claim a deduction on the 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.
The maximum deduction on payments made towards tuition fee can be claimed for up to Rs 1.5 lakh together with the deduction with respect to insurance, provident fund, pension etc. in a financial year.
Persons paying any sum/ fees towards the education of their children can claim tax deduction under Section 80C, subject to satisfaction of certain conditions which have been enumerated below:
Submit the receipt issued by the schools for the payment made during the financial year to their employer.They must also show it in form 12BB before submitting the proofs of investments at the end of the Financial year. For an individual other than a salaried employee, you will have to claim the deduction under VI-A schedule by showing the amount of fees paid under section 80C on the income tax return. It is important to mention here that children’s education allowance i.e part of the salary structure, and fees paid towards tuition fees of the Children are both different deductions. These, therefore, can be claimed separately within the limit prescribed (as mentioned above) as per the provisions of the Indian Income Tax Act, 1961.
No, reimbursement on children education allowance is not allowed for 3rd child if not claimed for 1st and 2nd.
Yes, adopted child’s school fees are also eligible for deduction.
No, hostel expenditure allowance can be reimbursed only if the child is staying in a hostel which is a part of residential school in which he is studying.
Apart from 80C, various other provisions allow deductions to taxpayer as follows
A taxpayer can claim deduction for the tuition fees paid for 2 children under the limit of Rs 1.5 lakh.
Income tax department allows reducing of the taxable income of the taxpayer in case the taxpayer makes certain investments or eligible expenditures allowed under Chapter VI A. 80C allows deduction for investment made in PPF, EPF, LIC premium, Equity linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya Samriddhi Yojana (SSY), National Saving Certificate (NSC), Senior Citizen Savings Scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds, etc.