INCOME TAX BENEFITS ON CHILDREN EDUCATION

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INCOME TAX BENEFITS ON CHILDREN EDUCATION

INCOME TAX BENEFITS ON CHILDREN EDUCATION

Education plays a great role in developing country in every field. It plays like a model role in the development of one country if the people of a country are educated then they can easily helps them in development

In order to foster education, the government provides certain relief to the individual tax payers in respect of certain expenses incurred by them for education.  Let us discuss these tax benefits.

 

  1. 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. The maximum deduction on payments made towards tuition fee can be claimed for up to INR 1.50 lakh together with the deduction in respect of insurance, provident fund, pension etc. in a financial year.

Eligibility of tuition fees for claiming deductions under Section 80C

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:

 Who is eligible: This deduction is available only to an Individual.

How many Children?: The deduction is available to a maximum of 2 children for each individual. Therefore, a maximum of 4 children’s deduction can be claimed, i.e. 2 by each parent.

 Maximum Limit: The deduction is available for maximum up to INR 1.50 Lakh for each financial year for each parent respectively. Please note that the aggregate amount of deduction under section 80C, 80CCC and 80CCD shall not exceed INR 1, 50,000 for the individual parent.

Tuition fees paid to an affiliated educational institution, university, college,

school within India: Deduction is available irrespective of the class attended by the child. But, the university must be situated in India. It can be affiliated to any foreign university.

 

An adopted Child’s school fees are also eligible for deduction.

 

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 2018 for the quarter ending March 2018 then the fee paid will be eligible for a deduction in the FY 2018-19.

 

 Fees for Private tuition/Coaching Classes not eligible for deduction u/s. 80C:-The fees should be paid to university, college, school or other educational institution. No deduction available for fees paid for private tuition’s , coaching courses for admission in professional courses or any other type of courses are not covered as that fee is not paid for FULL time education.

 

  1. EXEMPTION FOR CHILDREN’S EDUCATION AND HOSTEL

EXPENDITURE

Following exemption  is provided to an individual employed 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.

 

  1. TAX DEDUCTION FOR INTEREST ON EDUCATION LOAN

Under Section 80E

Only interest paid on an education loan qualifies for deduction under Section 80E of the Income tax Act. While the entire interest amount can be claimed as deduction, principal repayment does not qualify for any benefit. 

This benefit can only be claimed for eight consecutive years from the year in which borrower starts repaying or until the interest is repaid by the individual in full (whichever is earlier). The borrower will need to get a loan repayment certificate from the lender every year to claim.

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