It is better to plan your income tax liability in advance. If you are in employment you can plan your income for maximum tax benefits.

One of the main expenditure that you can claim as a deduction is tuition fee you pay for your children.

You can take double benefit for your child's education.

First under section 10, you can structure your salary by including child education allowance. Again under section 80C you can claim tuition fee paid for your children.

Deduction under section 10 for Child education allowance

Plan your salary structure to lower your tax liability.


Normally you have your salary structure in the popular brackets such as Basic Salary, DA, Conveyance, HRA etc.

One of the less popular but allowed deduction is education and hostel allowance for your child.

Education allowance up to 2 children is allowed. The limit under section 10 for child education allowance is Rs. 100 per child per month.

So if you have 2 children you can claim deduction of Rs. 2400 per year.

Further if you child is staying in hostel, you can claim Hostel allowance up to Rs. 300 per month per child. Again you can claim deduction of Rs. 7,200 per year.

Note that child education allowance is allowed if you have actually incurred these expenditure.

Deduction under section 80C for tuition fee paid

You can claim deduction under section 80C for tuition fee incurred on educating your child.

The deduction is allowed up to 2 children.

What is tuition fee?

Tuition fee is the fee incurred on education your child in a school. Do not confuse it with tuition done at a tutorial.

I have seen many people who claim deduction for full amount paid to school. This is not the correct way.

Fee you pay to school is not full amount for tuition itself. If you look at the fees paid receipt, it will have different parts such as tuition fee, computer fee, van fee etc.

You allowed deduction only for tuition fee part.

How much deduction is allowed under 80C for tuition fee?

Deduction is allowed up to Rs. 1,50,000 for a year for current assessment year. Actually tuition fee with other deductions should not cross maximum limit allowed under section 80C.

Deduction is allowed up to 2 children.

If you have 3 child, you can claim deduction only for 2 children.

Deduction is allowed if you have actually paid the fees. Further you can not claim deduction for any other amount paid to school other than tuition fee.

Other expenses such as van fee, library fee, donations etc. are not allowed.

You can claim expenses incurred on nursery or pre nursery classes too. Private tuition fees are not allowed as deduction.

80C deduction for tuition fee is allowed if incurred on self study?

No, tuition fee incurred on your own studies is not allowed under section 80C. Neither you can claim deduction for expense incurred on education your spouse or any other member.

Deduction is allowed only for tuition expenses incurred in educating your children.

Deduction is allowed on payment basis, if you have not paid the tuition fee then expense is not allowed as deduction.

80C deduction for tuition fee is allowed for expenses incurred in a school or university located outside India?

No, to claim deduction under section 80C school or university or education institute has to be situated in India.

If you have incurred any expense for educating your child in foreign country then deduction is not allowed.

Deduction under 80C for tuition fee paid for an adopted child or by an unmarried person

Even if you are not married or have adopted a child, you can claim deduction under 80C.

Section 80C does not mandate that person has to be biological father of child or person should be married.

If you have child from live in relationship, you can still claim deduction.

Conclusion

It is advised that you plan your taxes in advance and avoid last minute rush. If you working under employment, update your payroll records with HR department to include expenses incurred on education of your child.

By default Payroll structure given by HR does not include child education allowance, you can edit the structure and include the child education allowance and hostel allowance to avail full benefit given by government to save on your taxes.

Submit fees paid receipt to your HR department on time to avail deduction under section 80C.

Author
Posted by GST Payer under Income-Tax

I am a GST consultant and write latest news on KYG and here to learn and share GST Laws.Contact

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