Know About The Tax Benefits Of Children's Education

Parents are under a heavy financial load as a result of the annual increase in the expense of schooling. The Income Tax Department introduced several tax benefits on education to encourage literacy and education for the general public. These benefits let you lower your taxable income, which lowers the amount of tax that must be paid.

Certain provisions have been put in place by the Indian government under the Income Tax Act, 1961, to lessen the burden on taxpayers. These provisions enable you to deduct the costs of your children's education under two different parts of the Income Tax Act, as will be described below.

Tax Deduction under Section 80C of Income Tax Act

Tuition payments made for your children's schooling may be deducted from your gross income under Section 80C of the Income Tax Act. Here are some important details regarding using this section's deductions:

• Individual taxpayers are the only ones eligible for this deduction; HUFs and corporations are ineligible. 
• Section 80C allows for a maximum deduction of 1.5 lakh rupees each fiscal year.
• A taxpayer may only deduct up to two children at a time.
• Only expenses related to your children's education are eligible for this deduction. The tuition you paid for your own or your spouse's education is not deductible
• Only education expenses for full-time courses are eligible for the deduction
• The educational establishment needs to be appropriately affiliated and registered in India.
• Only educational expenses that were actually paid within a fiscal year may be deducted. Not eligible is any fee that has been due but has not yet been paid.
• The only fees that can be deducted are the ones for the tuition. The cost of books and materials, donations, private coaching, and any other costs are not eligible for reimbursement under this provision.

Benefits Under Section 10 (14) of Income Tax Act

Also note that If you work for a government-recognized company, you may be eligible for the Children's Educational Allowance under Section 10(14) of the Income Tax Act of 1961 and the Tuition Fee Tax Deduction under Section 80C. You should be eligible for both in order to maximise your benefits. While the tax deduction can help you save money during your child's formative years of education, don't forget to develop a long-term plan. If you are one of these salaried workers, you are eligible to claim tax exemption for these two benefits:

• Grants for Children's Education (CEA)

A certain amount is tax-exempt under Section 10(14) of the Indian Income Tax Act, 1961, for the benefit of their children's education. This allows nuclear families with up to two children to receive a Rs. 100 exemption per child.

• Accommodation Expense Refund

There is also an additional exemption of Rs. 300 per child, up to a maximum of 2 children, if the child attends a boarding school. The Income Tax Act's identical section similarly contains this clause.

Education Expenses Not Eligible For Tax Deduction

Following are some of the expenses exempted from the benefits:

• Costs other than tuition, such as donation charges, development fees, private coaching fees, hostel fees, mess fees, library fees, and so on, are not eligible for a tax deduction.
• The cost of tuition for part-time studies cannot be deducted from taxes.
• School expenses paid for a spouse, oneself, a brother, sister, mother, or any other relative besides children cannot be deducted from one's taxes. This deduction does not apply to any fees paid to foreign institutions for the education of children.

The questioned school must have the approval of the Central Government, any State Government, any UT Government, any University, or another recognised educational body with jurisdiction over the region in which the questioned school is located. These requirements also apply to pupils enrolled in LKG and UKG, the two classes that come before class 1. 

Conclusion

For the taxpayer to claim tax deductions on the costs of their child's education, the Government of India has created a number of provisions. This applies to both the children's education allowance exemption under section 10-14 ii and the children's education tuition fees exemption under section 80C. As a result, individual taxpayers can benefit from this income tax circular on college fees to reduce their tax obligations.

Also read: All You Need To Know About Education Expense Planner Calculator For Child

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