Tax Benefits on Children Education - Tax Saving Tips For Parents

Thankfully, investing in children’s education does have short term benefits on the tax front. Section 80C of the Income Tax Act allows deductions to taxpayers under various education-related heads.Below are a few ways in which you can minimize your tax liability when it comes to children’s education.

Child education Unit-Linked Insurance Plans are eligible for a maximum deduction of Rs 1.5 lakhs under Section 80C. They offer a two-fold benefit: insurance and equity returns.This can be an ideal long-term investment avenue for meeting education goals that are 10-15 years into the future. Being market-linked, they have an inherent potential for better returns in the long term. At the end of its term, the policy pays a lump sum maturity value. You can stagger multiple ULIP investments that pay at regular intervals so that your children’s education needs can be met comfortably.

Education loans can be indispensable for pursuing higher education courses. Whether your child plans to study in India or abroad, you are eligible for tax deduction. However, this is contingent on the loan being issued by a recognised financial institution. Under Section 80E, interest payable on education loan EMIs can be claimed.If you are already in the high-income tax slab, this exemption could lower your tax liability substantially as no upper limit for deduction has been prescribed.

This deductible is different from that for children’s education allowance. Tuition fees paid during an entire academic year can be claimed, if you are a salaried employee.
However, this benefit only applies to educational courses pursued within the country. It is also not applicable for short term courses.

Equity-linked savings scheme(ELSS) can be a vehicle for creating an education corpus for your children. You can opt for a systematic investment plan (SIP) in an equity-linked mutual fund that invests in large-cap or mid-cap stocks for long term education goals.Investments made in ELSS qualify for tax deduction under section 80C of the Income Tax Act, 1961.
Ask your employer for Form 12BB which needs to be filled for claiming exemption under this category. Reduce your tax liability and secure a world-class education for your child by adopting a balanced investment strategy.

The Indian government permits tax deductions and exclusions from income taxes on tuition fees paid by an individual for their children.
A person working in India is qualified for the following exemptions:

• Children's Education Allowance: Up to two children are eligible for a monthly allowance of INR 100 each.
• Allowance for Hostel Expenditure: INR 300 per month for each child, up to a maximum of 2.
• According to Section 10(14) of the Income Tax Act , this exemption only applies if the expenses were incurred in India.

Tuition fees paid to a university, college, school, as well as other educational institutions are tax deductible. Other fee components, such as development and transportation costs, are not tax deductible under Section 80C.The maximum deduction is up to Rs 1.5 Lakh in a fiscal year.

• This deduction can only be claimed by an individual parent, guardian, or sponsor.
• The deduction is only available for up to two children per individual.
• Each parent is permitted to claim up to Rs. 1.50 Lakh per fiscal year.
• The deduction is only available for full-time education programmes, such as those provided in nurseries, daycare centres, and play schools.
• The expense may also be claimed by a parent who is not married or divorced.
• Adopted children's school expenses are also deductible.

Submit the school's receipt for the payment made throughout the fiscal year to their employer. Before submitting the proofs of investments after the fiscal year, they must demonstrate it in Form 12BB.You must confirm the fees paid under Section 80C on the income tax return . The children's education allowance, which is a part of the wage structure, and the fees paid for the children's tuition can be claimed as separate deductions; it is vital to note this. As a result, these may be claimed individually up to the allotted limit in accordance with the rules of the Indian Income Tax Act, 1961.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.