Educating a child can be an expensive proposition for most parents. As the cost of quality education is on the rise, the potential for saving money seems less likely. However, there are tax benefits that can be availed under the provisions of the Income Tax Act, 1961. Recurring expenses such as tuition fees is one such category that qualifies for tax relief, subject to certain terms and conditions.

Amount of deduction

For salaried employees with up to 2 children, tuition fees paid in the entire academic year per child are tax-deductible. This means that a working couple can claim tax benefits for four children in total at two each. The maximum tax credit available under this head is Rs 1.5 lakh as specified in Section 80C.

If tuition fees are a major source of expenditure, taxpayers can claim tax benefit to its full extent. However, in case there are other investments that you would like to claim exemption on, you can claim deduction for each in a distributed manner.

Eligibility

Income tax deduction on tuition fees can be availed in the following scenarios:
  • The educational institution offering the course of study in question should be located in India. In other words, tuition fee deduction does not apply to those studying abroad. However, students enrolled in colleges affiliated with foreign universities or local campuses of international institutions are still eligible for tuition fee deduction.
  • Single parents or legal guardians of students are eligible to claim tax benefits provided their children study in a local school or college. You do not have to be a biological parent to claim tax deduction on tuition expenses.
  • Part-time courses or courses conducted through the online medium are not eligible for claiming benefit under this head.

Exclusions

While schools and colleges include itemized charges on the fee receipts, it is up to the taxpayer to include only the amount charged for tuition while filing Income Tax returns. According to the guidelines issued by the Income Tax Department, the following expenses are not considered tax- deductible:
  • Admission fees
  • Annual fees
  • Fees for extra-curricular activities
  • Private coaching
  • Boarding or campus accommodation
  • Library fees
  • Donations
  • Stationary costs
On the same note, tuition fees paid for one’s own education or on behalf of someone in the same peer group are also not eligible for tax relief.

Claim process

Salaried employees need to fill Form 12BB to claim tax deduction for tuition expenses along with the necessary documents in support of the declaration. Self-employed or non-salaried professionals can claim tax benefit under Section 6 of the Income Tax Return (ITR) form. Tuition fees paid for the entire year can be claimed under this section backed by adequate evidence.
Taxes saved on tuition fees can be routed into long term child education investments and also to ease the short-term financial situation.

 
DISCLAIMER

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.



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