As per the new tax rates introduced for FY 2020-21 (AY 2021-22) in the Budget 2020, the benefit of reduced tax rates can be claimed, if the taxpayer opts to forego benefits available under various income tax deductions and exemptions except for section 80CC (2) and 80JJAA. To claim tax benefit u/s 80C,80D, HRA, etc then you should opt for old tax rates.

What is the children Education allowance?

To promote education and literacy for the population, The Income Tax Department introduced various tax benefits on education that allows you to reduce the amount of your taxable income, thus reducing the payable tax.

The Government of India allows for tax exemption on the tuition fee paid by an individual for their children’s education. Moreover, for some salaried individuals, payments of education fee for their children also a part of their salary structure.

Types of Fees reimbursable under Section 10(14)

• Tuition Fee
• Admission Fee
• Special Fee charged for electronics, music, or any other subject
• Practical Fee
• The fee that is paid for the use of any appliances or any form of aid.
• Library Fee
• Other related fee charges

Who is Eligible to Claim Benefits?

Only salaried individuals are eligible to claim tax benefits on children’s tuition fees. Besides, an individual can claim deductions for a maximum of two children. If you are a salaried professional with three children, you can claim tax benefits for only two of those children. Again, if your spouse is salaried as well, you can claim tax benefits on all of your kids’ education fees.

Tax deduction on Tuition Fees Covered Under Section 80C?

Apart from Children’s Education fee, a separate Tax Deduction can be claimed on Tuition Fee paid by parents for the education of their children. This deduction includes any Tuition Fee paid at the time of admission or any other time to a registered school, College or University based in India. This tax deduction can be claimed for the purpose of Full-time education under Section 80C of the Income Tax Act.

Eligibility for Tuition Fee Tax Deduction under Section 80C

Tax deduction can only be claimed by individual assesses and not by HUF or corporates.

• Tax deduction of only Rs 1.5 Lakh is being allowed under Section 80C of the Income Tax Act 1961 that too only for two children per assessee. In the case that both parents are taxpayers, they can claim a tax deduction for up to 4 children. Otherwise, an individual assessee cannot claim for more than two children.
• Tax deduction can be claimed for educating the children exclusively. It cannot be claimed for fee paid for educating any other else.
• Tax deduction on Tuition fees can only be claimed for full-time courses be it school, graduation or post-graduation.
• Education should be from an affiliated institution only be it is a school, college or university. It should be recognized.

Who are eligible to claim benefits?

Only salaried individuals are eligible to claim tax benefits on children’s tuition fees. Besides, an individual can claim deductions for a maximum of two children. If you are a salaried professional with three children, you can claim tax benefits for only two of those children. Again, if your spouse is salaried as well, you can claim tax benefits on all your kids’ education fees.

How to claim tax exemption?

• Submit the receipt issued by the educational institution for the payment made in the current financial year to the employer.
• Show the Tuition Fee paid in form 12BB before submitting the proof at the end of the financial year.
• For any individuals other than salaried individuals, they must claim the deduction under VI-A schedule by showing the fee paid under the section 80C during the filing of an income tax return.

Have Questions?

Benefits on children’s tuition fee are helpful in saving on taxes. However, you need to submit the right documents and follow the procedures to the point to fully claim the benefits. We suggest you seek assistance from the pros and have them take care of all your tax benefits needs.