Which Education Fees Deductions are Available Under Income Tax?

Which Sections Address Income Tax Deduction Benefits for Tuition Fees?

To promote the importance of education amongst the citizen, the Income Tax Department introduced various tax benefits or education fees deduction in income tax. This helps the taxpayer reduce the amount of taxable income. The Government of India allows tuition fee deductions paid by individuals for their children.

Section 10(14)

Tuition fees deduction in India can be claimed by individuals employed in India under section 10 (14) of the Income Tax Act as Children’s Educational Allowance. Section 10 (14) provides tax benefits of up to Rs 1200 per year per child for up to two children for educational expenses, including tuition fees. An individual taxpayer can claim a tuition fee deduction for a maximum of two children under section 10 (14). If an individual has a taxpaying spouse, then the spouse can claim up to two more children.

Section 80C

Apart from Children’s Education Allowance, a separate tax deduction is allowed on tuition fees paid u/s 80C. Section 80 C has provisions for tax deduction benefits for tuition fees in income tax. The maximum limit of income tax deduction allowed under section 80 C is Rs. 1.5 lakh. If the taxpayer has a high tuition fee requirement or a top priority, he can utilize the entire limit for tuition fees in 80C. However, if the taxpayer has other priorities also, like life insurance/investment/PF, then the entire income tax deduction limits of up to 1.5 lakhs need to be distributed according to the taxpayer’s priority.

What is the Eligibility for Tuition Fees Deduction Under Section 10(14)

• Tuition fee is the type of fee eligible for reimbursement u/s 10(14)

• The allowance is provided to a person employed in India only

• The allowance in the form of education fees deduction in income tax is provided only when expenses are incurred within India

• For Children’s Education Allowance, no Minimum age is prescribed for claiming reimbursement

• The maximum age to claim this reimbursement for any normal child is 20 years, while for specially-abled children, it is 22 years.

• The school or institution should be recognized by the Central, State, UT, or any recognized educational authority.

• The tuition fee deduction is applicable for up to two children. Each individual can claim income tax deductions for up to two children for the paid tuition fees. If the husband and wife are both individual taxpayers, then in such a family, the income tax benefit for a total of four school-going children can be claimed, provided all the children go to schools located in India.

• Education fee deduction in income tax can be claimed by any taxpayer who is a legal guardian of school-going children, due to adoption or the absence of parents.

• Tuition fees for income tax purposes can also be claimed by single parents and unmarried guardians of school-going children if they are sending their children to authorized schools located in India.

What is the Eligibility for Income Tax Deduction for Tuition Fees u/s 80 C?

• This deduction is available only to an individual parent, guardian, or sponsor

• An adopted child’s tuition fee is also eligible for deduction.

• This deduction is available to a maximum of 2 children for each individual.

• Each parent can claim a deduction of up to Rs 1.50 lakh separately every financial year.

• Tuition fees under 80 C can be claimed only when the school is located in India and is recognized by the Indian Government.

• The school can be a government, public or private school. Here it is important to note that accredited schools in India affiliated with foreign universities/institutes or boards are also eligible for education fees deduction in income tax.

• Authorized junior schools, toddler schools, playschools, and crèches that educate children and are located in India are also eligible for tuition fee deduction.

• However, Indian schools located abroad are not eligible for tuition fee deduction under section 80 C of the income tax act.

• Income tax deduction benefits on school/college tuition fees can be only claimed for full-time courses. Part-time courses are not included under eligibility for income tax deductions on tuition fees under section 80c.

• Tuition fees for income tax benefits can be claimed by the parent(s) or guardian(s) for school or college-going dependent children who are minors and above eighteen years of age.

Which Educational Expenses are not Eligible Under Tuition Fees Deduction?

Tuition fees under 80 C can only be claimed for expenses mentioned as tuition fees, and no other payments are made to the school or college. Generally, most authorized schools located in India issue bills and receive school fees payment. The school fees payment receipt mentions the categories under which fees have been charged.

While claiming for tuition fee deduction, the individual taxpayer needs to deduct the amount mentioned only under the head of tuition fees. The following costs are not included in tuition fees:

• One-time school admission charges

• Annual charges

• Transportation costs

• Charges for extra classes

• Fee for curricular activities

• Charges for smart classes

• Costs applicable towards sports and activities classes

• Expenses for taking coaching or private tuition

• Hostel fee

• Mess charges

• Boarding fee

• Library costs

• Stationary expenses

• Excursion fees

• School/college donation

• School college development work charges

• Late school payment

• Readmission fees

(The above list is not exclusive)

The above-mentioned exclusions apply to exclusions of not being tuition fees. There are several other exclusions which, despite tuition fees, cannot be claimed for deduction under tuition fees expenses under 80 C. These mainly include the following exclusions

• Tuition fees for the part-time course

• Tuition fees paid in foreign institutes/colleges/university

• Tuition fees not paid for children but for self, spouse, brother, sister, relative

• Tuition fees for Indian schools in foreign countries

When Can an Income Tax Deduction on Tuition Fees be Claimed?

Tuition fee deduction in income tax can be claimed only in the following tax year after tuition fees have been paid. For example, for tuition fees paid in the year 2020-21, an income tax deduction claim can be raised in tax filing year 2021-22. Tuition fee deduction is thus only applicable on the paid amount and not on the amount required to be paid.

How to Claim Income Tax Deduction on Tuition Fees Expenses?

Most schools operate from one fiscal year to another, and individuals can ask the school to generate school fees payment receipts for the entire financial year. The fees must be segregated under relevant heads of charge, and the tuition fees paid during the fiscal year should be mentioned under the clear header.

Processes defined for claiming income tax deductions on tuition fees u/s 80c and 10 (14) fall under two categories:

For Salaried Individuals

Salaried individuals would need to submit the school fees receipt for the entire year as well as filled in form 12 BB to their employer. Form 12 BB is an investment declaration form by a salaried individual that mentions all the tax deductions and exemption claims made by the employee and includes tuition fees expenses for income tax calculation. The documents need to be completed and submitted before the end of the financial year.

For Non-Salaried Individuals

Non-salaried individuals can also claim tuition fees deduction. While filing the income tax return form, a non-salaried individual would need to claim the deduction under section VI-A. In section VI-A, the non-salaried taxpayer would need to show the amount paid as tuition fee for the whole financial year and support his filing with relevant fees receipt document.

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