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Child's education fees: Do they have tax benefits?

With the cost of education rising every year, parents find themselves under a significant amount of financial burden. Fortunately, the Government of India, through the Income Tax Act, 1961, has put certain provisions in place to ease the burden on taxpayers. Using these provisions, you can claim fees paid for your children’s education as deductions under two different sections of the Income Tax Act, as explained below.

Tax Deduction under Section 80C:
Under Section 80C, tuition fees paid for your children’s education can be claimed as a deduction from your total income. Here are the other salient points about claiming deductions under this section.
1. This deduction is available only to individual taxpayers and not to HUFs or corporates.
2. The maximum deduction that can be claimed in a financial year is ₹ 1.5 Lakh under section 80C.
  3. A taxpayer can claim the deduction for a maximum of 2 children only.
4. This deduction is permitted only for the fees paid towards educating your children. You cannot deduct the fees paid for your own education or the education of your spouse.
5. The deduction can be claimed only on the education fees paid for full-time courses.
6. The educational institution must be affiliated appropriately and registered in India.
7. Only the educational fees actually paid during a financial year can be claimed as a deduction. Any fee that is due but is yet to be paid is not eligible.
  8. Only the tuition fees paid are eligible for deduction. Any other fees like donations, private coaching, and the cost of books and materials cannot be claimed under this section.

Tax Exemption under Section 10(14):
Section 10(14) of the Income Tax Act is applicable only to salaried employees who receive children’s education allowance and children’s hostel allowance as part of their salary. If you’re one such, salaried employee, you can claim tax exemption on these two allowances. However, these exemptions are subject to certain limits, as explained below.

AllowanceExemption Limit
Children Education Allowance ₹ 100 per month per child up to a maximum of 2 children.  (This gives you a maximum exemption of ₹2,400.)
Children Hostel Allowance ₹ 300 per month per child up to a maximum of 2 children. (This gives you a maximum exemption of ₹7,200.)

You can claim tax exemption on these allowances only if it was paid during the financial year.

With these two tax benefits at your disposal, you can reduce the impact that your children’s education fees has on your finances by up to ₹ 1,59,600 (₹ 1,50,000 under section 80C, ₹2,400 for children’s education allowance, and ₹7,200 for children’s hostel allowance)

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