Tax Benefits on Tuition Fee
Tax Benefits for School Tuition Fee under section 80C
A part of money you spend on educating your kids can be claimed as tax deduction u/s 80C of I-T Act. The tuition fees paid in school for children are eligible for deduction. As this deduction u/s 80C, therefore the maximum limit allowed as deduction is Rs. 1, 50,000 (together with all other deductions u/s 80C & 80CCC). This deduction can be claimed by individual for maximum 2 children and is only allowed on actual amount paid as tuition fees to eligible educational institutions.
The government of India allows tax breaks & income tax exemption on the tuition fees paid by the individual for their children. To promote it must be noted that deduction is available only on the tuition fees part of the total fees paid. Higher literacy rate & education of the children within India, there is number of tax benefits which the person can take for reducing their taxable income.
the tax benefits available for payment of education or school tuition fees of children that are part of the salary structure of the salaried individual as well as taking an additional deduction under section 80C for making investments in children’s education.
What can you claim?
This deduction is available only for full-time courses and for fees paid to a recognized university, college, school or other educational institution in India. All tuition fees paid during pre-nursery, play school and nursery class are also included.
No deduction is available for fees paid for private or home tuition, coaching courses for admission in professional courses, part-time courses and distance learning courses. Also, there is no rebate on the other charges paid to schools or colleges, such as: late fees, development fees, transport charges, hostel charges, mess charges, library fees, scooter/cycle/car stand charges incurred for education, term fees, building fund, and donation or capitation fee.
Deduction cannot be claimed for tuition fees paid to foreign universities situated outside India. Also, tuition fee paid for self or spouse or other dependents, other than children, is not deductable.
To claim the deduction, you should submit payment receipts to your employer. However, if you fail to submit the receipts, you can also claim the deduction while filing your income tax return.
Look for other tax-saving investment avenues, only if you are still left with scope to save taxes after taking into account all such expenses that help you bring down the taxable income.
Eligibility of Tuition fees for claiming deduction u/s 80C
Persons paying any sum/ fees towards the education of their children can claim tax deduction provided following conditions are satisfied:
- Who is eligible: Deduction is available only to an Individual.
- How many Children? Deduction is available to a maximum of 2 children for each individual. Therefore, a maximum of 4 children deduction can be claimed, i.e. 2 by each parent.
- Maximum Limit: Deduction is available maximum up to INR 1.50 Lakh for each financial year for each parent respectively. Please note that 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 affiliated Educational institution, University, College, School within India: Deduction are 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.
- The deduction is available only for full-time education courses that include Nursery School, Creches & play schools.
- Deduction is available only on actual payment and not on the payable basis: For example, if fees is paid by the parent in April 2017 for the quarter ending March 2017 then fee paid will be eligible for deduction in FY 2017-18.
- Fee can even be claimed by Unmarried person/ divorced parent.
- Adopted Child’s school fees are also eligible for deduction.
How to Apply?
To apply, you need to get a receipt of the tuition fees from the institution and submit it to your employer. Additionally, it should reflect on your IT declaration form before you submit the receipt as a proof of investment.
Tax benefit for how many children?
The benefit applies for the fees paid for up to two children. So if a couple has four children, both can claim tax benefit as both have a separate limit of two children each.
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.
Tax Deduction on Tuition Fees under Section 10:
Section 10 of the Income Tax Act offers an additional tool for taxpayers to save some of their tax. Under this provision, salaried individual 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.
How to claim the tax exemption for Children education allowance?
The person would need to submit receipt issued by the Schools for the payment made during the financial year to their employer & also show in form 12BB before submitting proofs of investments at the end of the financial year.
For an Individual other than salaried employee, you would 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 education allowance i.e. part of salary structure & fees paid towards tuition fees of the Children are both different deductions & is, therefore, can be claimed respectively within the limit prescribed as per the India income tax Act.
Non-eligibility of payments towards Tuition fees
- Deduction is not available for payment made towards Development fees, donation or charity, Private Coaching center, other expenses such as hostel expenses, mess charges, library charges or similar payments.
- Deduction is not available for payment made towards part-time courses.
- Deduction is not available towards payment made for school fees of self, spouse, brother or sister, father or mother or any other relative.
- Late school fees paid is also not eligible for deduction.
- Fees paid to a foreign university situated outside India would also not be eligible for deduction.
Not allowable Expenses:-
- Development feesor donation not eligible.
- Transport charges, hostel charges, Mess charges, library fees, scooter/cycle/car stand charges incurred for education are not allowed.
- Late feesare not eligible for deduction.
- Term Fees is not eligible for deduction.
- No deduction for part time or distance learning courses.
- No rebate for private tuition.
- Building fund or any donation etc. not allowed.
Conditions to qualify for deduction
- Only tuition fees paid for full-time education to regular educational institutions like schools, colleges, universities, etc. qualifies for deduction.
- Fees like admission fees, development fees, uniform fees or any other fees do not qualify for deduction.
- Deduction can be claimed whether the child attended the class or not.
- Payment of tuition fees to play schools or day care is allowed as deduction.
- Adopted child’s tuition fees are also eligible for deduction.
Other Important Factors:
- The tax benefits on this can be claimed by divorcees and unmarried individuals sponsoring a child’s education as well.
- The Section covers claims on education allowance for adopted children.
- You can claim deductions only on tuition fees and not on any other charges an institution levies. This could be hostel expenses, mess charges, transportation charges, library expenses, private coaching centers, and other similar expenses.
- Deductions can be claimed only for the fee paid to Indian institutions.
- Similarly, deductions are not applicable for the payment of school fees of your spouse, sibling, or parents. For example, you cannot claim tax benefits on the payment of your brother’s school fees.
- You cannot claim deductions on late payment of school fees.