Tax Benefits of Tuition Fees & Education Allowances 2022-23
The government allows income tax deductions for education because education is a vital part of one’s life. Developing countries like India benefit from it by increasing literacy rates. There are lots of tax benefits available for Children’s Education Allowance, Tuition Fee Payment, and School Fee Payment.
- Deduction under section 80C for School/College Fee Payment [Section 80C]
- Exemption for Children Education & Hostel Expenditure Allowances [section 10 (14)]
School Fee or Tuition Fee Deduction
Under section 80C, you can claim a deduction for the payment of education fees for your children. There is a maximum deduction of Rs.1,50,000 for payments made during a financial year. There is a condition stating that the deduction under 80C for tuition fees and other investments like LIC, mutual funds, fixed deposits etc. is limited to Rs. 1,50,000 inclusive.
Any Parent can deduct tuition fees paid to educational institutions such as universities, colleges, schools, or other institutions as income tax deduction under section 80C.
There is no need to confuse school fees with tuition fees here. Any payment made to universities, colleges, schools, or other institutions eligible for income tax deductions, excluding development fees and transport fees.
Tuition Fee Deduction Eligibility
Persons who wish to claim a tax deduction on tuition fees need to satisfy the following criteria.
- Only individuals can claim tax benefits, companies and HUF are eligible to claim deductions.
- Limit: The maximum amount of deduction under 80C is Rs 1.5 lakh per financial year for each parent. This limit is for aggregate deductions under 80C, 80CCD, and 80CCC.
- Two Children: The deduction of tuition can be availed only for two children per assessee i.e. if both parents are taxpayers then the deduction can claim for 4 children.
- Child Education only: Deduction is permitted only to the extent of tuition fees paid for educating the children of the taxpayer. Fees paid for anyone else are not allowed.
- Courses: The deduction can be claimed for the full-time courses only. These are school fees, fees for graduation post graduation i.e. fees of part-time courses are not allowed as a deduction.
- Affiliation: The school, college or university must have necessary affiliations and it must be situated in India.
- An adopted Child’s tuition fee is also eligible for deduction.
- Payment-based deduction: Deduction is allowed on actual payment of fee i.e. if the fee of March 2022 is paid in April 2022 then the deduction is allowed in FY 2022-23.
Expenditure not allowed as deduction u/s 80C
The following expenses are not eligible for deduction under section 80C but are related to education only:
- Payment of transport Charges
- Payment of Private Coaching Fees
- Late fees are not eligible for deduction
- Payment of fees paid outside India
- Hostel expenses, mess charges and library charges
- Development Fee or donation
- Payment of tuition fees of self, spouse, brother or sister, father or mother.
Exemption for Children Education & Hostel Expenditure Allowance
Exemptions under section 10 (14), provided to individuals are:
- Children Education Allowance: Rs 100 per month per child up to a maximum of 2 children
- Hostel Expenditure Allowance: Rs 300 per month per child up to a maximum of 2 children