To promote education, the government of India allows Income Tax Deduction under Section 80C and Section 80E. Tax Deduction under Section 80C is allowed for payments made by self and deduction under Section 80E is allowed for Education loan. Now an individual assessee can claim Tax Deduction on tuition fee that is paid to schools or colleges for the higher education of children under section 80C of Income Tax Act, 1961.
Here, we would be concentrating on the Deduction for the payment of Children Education Fee through own sources for which the deduction is available under Section 80C. Payments towards tuition fee to any university or colleges or educational institutions in India for a full time education at the date of admission or otherwise is eligible for tax deduction under section 80C.
Tax Benefit on Education
The most powerful weapon of future is the education; It can change the way of our world functions. The Basic Education in India can cost around Rs. 7,500/- per year per kid, for ten years the overall cost of schooling is around Rs 1 lakh. Higher education & professional courses are even more expensive. It means that a parent would have to keep sufficient funds to give the best education for their children. Every year government of India has special provisions to ensure that assessee gets tax benefits on the tuition fee paid towards educating their children. As per certain provisions of the Income Tax Act, Individuals are entitled to tax deductions helping them save tax while providing quality education to their children.
Tax Deduction on Tuition – Section 80C
Section 80C of the Income Tax Act has provision for tax deductions on education fees paid by a parent towards educating their children. Assessee can avail deduction of Rs 1.5 lakh u/s 80C (Income Tax slab 2015-2016), with other investments also eligible for this rebate. Individual can claim the tuition fee paid by them towards their children’s education as deductions in a particular financial year.
For example, Mr. Lee Dong Wook is a salaried individual with two children, aged 20 and 15 respectively. Mr. Lee pays an annual tuition fee of Rs. 45,000/- towards his daughter’s engineering fee and Rs. 20,000/- for his son’s school fee, spending a total of Rs. 65,000/- per year on educating his children. In this case, Mr. Lee Dong Wook can now claim this amount as tuition fee deduction under Section 80C.
Eligibility for Tax Deduction under Section 80C
Taxpayers who wish to request the Tax deduction on education or tuition fee need to ensure that they satisfy the following criteria. Let us take a look at the Eligibility for the Income Tax Deduction u/s Section 80C.
Tax benefit on Education fee can be availed only by the individual assessee, with Hindu Undivided Families(HUF) or corporates not eligible for deductions.
The maximum deduction permitted as per the Section 80C is Rs 1.5 lakh per financial year, with deductions available only for two children per assessee. If both parents are taxpayers, then they can claim deductions for four children. An individual assessee cannot claim the fee paid towards educating more than two children as the deduction.
The school, college or university in which child studies should have necessary affiliations.
One can claim deductions on the tuition fee paid towards full time courses only. It includes school fees, fees for graduation or post-graduation courses. Prices paid for part-time courses cannot be availed as deductions.
For Child Education
The Income Tax Deduction is permitted only to the extent of education tuition fee paid towards educating the children. Fees paid towards teaching anyone else, including taxpayer or a spouse cannot be claimed as deductions.
Tuition Fees Deduction – Section 10
Section 10 of the Income Tax Act offers an additional tool for taxpayers to save some of their tax. Under this provision, individual salaried taxpayers are eligible to save tax to the tune of Rs 100 per month per child. This amount can be availed for a maximum of 2 children per taxpayer, which means that an individual taxpayer is eligible for tax exemptions of Rs 200 per month. This amount can be claimed as exemption only in the financial year in which the fee was paid. In addition to this exemption, one can also claim exemption on hostel costs on his/her children. This hostel allowance is capped at Rs 300 per month per child, subject to a maximum of 2 children.