Tax Deduction for Self Education Expenses in India

Tax Deduction on Tuition Fees under Section 80C

Section 80C of the Income Tax Act has provisions for tax deductions on tuition/education fees paid by a parent towards educating his/her children. Taxpayers can avail deductions to a tune of Rs 1.5 lakh under Section 80C (as per 2020-21 tax slabs), with other investments also eligible for this rebate.

Parents can claim the tuition fee paid by them towards their children’s education as deductions, ensuring that they save tax even if they don’t have other tax saving instruments. Parents can claim the actual fee paid by them in a particular financial year.

For example, Mr. Ritesh is a salaried individual with two children, aged 21 and 14 respectively. He pays an annual tuition fee of Rs 50,000 towards his son’s engineering fee and Rs 15,000 for his daughter’s school fee, spending a total of Rs 65,000 per year on educating his children. He can now claim this amount as tuition fee deduction under Section 80C, helping him save a sizeable amount in tax.

Tuition Fees Eligibility for Tax Deduction under Section 80C

1. Claimant Eligibility: Only parents or legal guardians can claim this deduction, which also extends to fees paid for adopted children.
2. Individual Assessee: This deduction is exclusively available to individual taxpayers. Hindu Undivided Families (HUFs) and corporations are not eligible.
3. Number of Children: Each parent can claim this deduction for a maximum of two children. If both parents are taxpayers, they can collectively claim deductions for up to four children.
4. Maximum Limit: The highest deduction limit is Rs 1.5 lakh per financial year.

1. Maximum Age: There is no specified minimum age requirement for the child.
2. Tuition Fee: The deduction pertains solely to full-time educational fees and does not encompass development fees, donations, private coaching charges, or other expenses such as hostel and library fees.
3. Recognised Institution: The educational institution must be located in India and possess the requisite affiliations.
4. Deduction Mode: This deduction is applicable only on the basis of actual payment, not on the basis of amounts payable.

Payments not eligible for Tax Deduction

Tuition fee deduction does not cover the following educational expenses:

1. One-time school admission charges
2. Annual charges
3. Transportation costs
4. Charges for extra classes
5. Fee for curricular activities
6. Charges for smart classes
7. Costs related to sports and activity classes
8. Expenses for coaching or private tuition
9. Hostel fees
10. Mess charges
11. Boarding fees
12. Library costs
13. Stationery expenses

1. Excursion fees
2. School donations or college donations
3. School development work charges or college development work charges
4. Late school payment
5. Readmission fees

(The list above is not exhaustive)

In addition to the aforementioned exclusions that pertain to non-deductible tuition fees, there are other exclusions that cannot be claimed as deductions under Section 80C despite being categorised as tuition fee expenses. These mainly include:

1. Tuition fees for part-time courses
2. Tuition fees paid to foreign institutes, or colleges, or universities
3. Tuition fees that are not paid for children but for oneself, a spouse, brother, sister, or relative
4. Tuition fees for Indian schools in foreign countries

Tax Deduction on Tuition Fees under Section 10

Section 10 of the Income Tax Act offers an additional tool for taxpayers to save some of their tax. Under this provision, salaried individual taxpayers are eligible to save tax to the tune of Rs 100 per month per child.

This amount can be availed for a maximum of 2 children per taxpayer, which means that an individual taxpayer is eligible for tax exemptions of Rs 200 per month. This amount can be claimed as exemption only in the financial year in which the fee was paid.

In addition to this exemption, one can also claim exemption on hostel costs on his/her children. This hostel allowance is capped at Rs 300 per month per child, subject to a maximum of 2 children.

Tuition Fees Eligibility for Tax Deduction under Section 10(14)

The eligibility criteria for claiming a deduction in the tuition fees under Section 10(14) of the Income Tax Act, 1961, are as follows:

1. The deduction is available to individuals employed in India.
2. The educational expenses must be incurred within the territory of India to qualify for the deduction.
3. There is no specific minimum age requirement for claiming the Children's Education Allowance.
4. The maximum age for reimbursement eligibility is 20 years for typically developing children and 22 years for specially abled children.
5. The educational institution where the tuition fees are paid must be recognised by either the Central, State, Union Territory or any other authorised educational authority.

1. The deduction in the tuition fee is applicable for up to two children.
2. If both spouses are individual taxpayers, they can collectively claim the income tax benefit for a maximum of four school-going children, provided all these children attend schools within India.
3. The deduction can also be claimed by any taxpayer who is the legal guardian of school-going children, either due to adoption or in cases of parental absence. 
4. Single parents of school-going children and unmarried guardians of school-going children can avail of the tuition fee deduction for income tax purposes when they are sending their children to accredited schools situated in India.

Allowances for Children's Education and Hostel Expenses under Section 10(14)

Section 10(14) of the Income Tax Act 1961 grants special allowances to salaried individuals for the education and hostel expenses of their children. These allowances include:

1. Children's Educational Allowance: This allowance permits an amount of Rs. 100 per month per child enrolled in an educational institution for a maximum of two children.
2. Hostel Expenditure Allowance: Salaried individuals are eligible for an allowance of Rs. 300 per month per child residing in hostels for up to two children.

Types of Fees Reimbursable under Section 10(14)

Section 10(14) of the Income Tax Act 1961 allows for the reimbursement of the following types of fees:

1. Tuition fees
2. Examination fees
3. Fees for specialised courses in fields like agriculture, electronics, music, and more.
4. Other fees that are essential for a child's education.

Claiming Income Tax Deduction on Tuition Fees

An income tax deduction for tuition fees can be claimed in the financial year during which the fees were paid. For instance, if you pay tuition fees in the financial year 2023-24 for your child, you can claim a deduction for those fees when filing your income tax return for the financial year 2023-24.

It's essential to emphasise that the deduction cannot be claimed for any fees that are pending or due to be paid but the actual amount of fees paid.

How to Claim Income Tax Deduction on Tuition Fee Expenses

Claiming income tax deductions on tuition fee expenses can be done under sections 80C and 10(14) of the Income Tax Act in India. Here's how individuals can go about claiming these deductions:

For Salaried Individuals:

1. Step 1: Collect School receipts for tuition fees paid to the educational institution for the financial year.

1. Step 2: Complete Form 12BB, which is used by salaried individuals to declare various investments and claims for tax exemptions and deductions, including those for tuition fees.

1. Step 3: Submit the filled Form 12BB along with the tuition fee receipts to your employer. Ensure this is done before the end of the financial year to enable timely processing.

1. Step 4: Your employer will use the information provided in Form 12BB to adjust your tax deductions. This will be reflected in your salary calculations and help to reduce the taxable income.

For Non-Salaried Individuals:

1. Step 1: Gather receipts for the tuition fees paid for the educational courses undertaken during the financial year.

1. Step 2: When filing your income tax return, you need to claim the tuition fee deduction under section VI-A of the relevant income tax form.

1. Step 3: In the relevant section (VI-A) of your income tax return, report the total amount of tuition fees paid during the financial year. This helps in claiming the deduction.

1. Step 4: Along with your income tax return, attach the necessary supporting documentation, such as the tuition fee receipts, to substantiate your claim for the deduction.