Tax Benefits Of Your Child's Education Fees

As a parent, you strive hard to ensure that your children get the best possible education. However, considering the rate at which inflation in this sector is soaring, the costs for providing quality education to your children are only going to rise in the future. Though you cannot do much about this, what you can do is avail tax benefits in lieu of money spent on your child’s education.In this article, we will discuss how you can claim tax deductions against the expenses incurred by you on your child’s education, as per the Income Tax (IT) Act of 1961 . Let’s get started.

Under section 80C of The IT Act , the expenses incurred by the taxpayer for paying tuition fees of his/her children is eligible for deductions from his/her taxable income. This deduction can be claimed either at the time of admission of the child in school/college or at the time of filing IT returns. The maximum deduction allowed under this section is Rs. 1.5 lakh per year.In case you and your spouse are jointly bearing the cost of your child’s education, both of you can individually claim a deduction of up to Rs. 1.5 lakh u/s 80C. However, note that these deductions are available only for the tuition fees paid by you for your children and not on other expenses that you may incur, including donations, stationery, admission fees etc.

Section 10(14)(II) of The IT Act lists certain special allowances that can be claimed as exemptions from the taxable income of the taxpayer. The two such expenses mentioned under this clause are children’s education allowance and children’s hostel allowance. This refers to the money spent by the taxpayer on his/her children’s educational fees and hostel accommodation.However, these exemptions are available up to a certain limit only. The maximum exemption allowed for children’s education allowance is Rs. 100 and for children’s hostel allowance is Rs. 300 per month per child, for a maximum of two children. This means that under this clause, you can claim a maximum deduction of Rs. 9,600 per year if you’re having at least two children. To Conclude You should avail these tax benefits against the expenses incurred by you on your children’s education and reduce your tax outgo. The savings that can make by reducing your tax burden through these exemptions can be invested further to build a corpus for your children’s higher education.Ready to make the most of your money? Start your tax planning journey now!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.