Tuition Fees Deductions Available Under Income Tax

Which Sections of Income Tax Deduction Provide Benefits for Tuition Fees?

To promote the importance of education amongst the citizens, the Income Tax Department introduced various tax benefits or education fees deduction in income tax. These tax benefits or education fees deductions help taxpayers reduce their taxable income by allowing them to claim deductions for tuition fees paid for their children's education. 

1. Section 10(14)

   Section 10(14) of the Income Tax Act, 1961, allows taxpayers who are employed in India to claim a deduction for tuition fees paid for their children's full-time education at a school, college, or university in India. The maximum deduction that can be claimed under this section is Rs. 1200 per year per child, for up to two children. If an individual has a taxpaying spouse, then the spouse can claim up to two more children.

2. Section 80C

   Section 80C of the Income Tax Act in India provides tax deduction benefits for tuition fees paid by parents for their children's education. The maximum limit for income tax deduction under Section 80C is Rs. 1.5 lakh. Taxpayers can utilize the entire limit for tuition fees if that is their top priority. However, if the taxpayer has other priorities, such as life insurance, investments, or provident funds, then the income tax deduction limit of up to 1.5 lakhs needs to be distributed according to the taxpayer's priorities.

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

To be eligible for the tuition fees deduction under Section 10(14) of the Income Tax Act, 1961, the taxpayer must meet the following conditions:

• The allowance is provided to individuals employed in India only.

• Expenses must be incurred within India to be eligible for the deduction.

• There is no minimum age for claiming Children’s Education Allowance.

• The maximum age for claiming reimbursement is 20 years for normal children and 22 years for specially-abled children.

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

• The tuition fee deduction is applicable for up to two children.

• If both husband and wife are individual taxpayers, they can claim the income tax benefit for a total of four school-going children, provided all children attend schools in India.

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

• Single parents and unmarried guardians of school-going children can also claim tuition fees for income tax purposes if they are sending their children to authorized schools located in India.

What are the Allowances for Children’s Education and Hostel Expenditure under Section 10(14)?

Under Section 10(14) of the Income Tax Act 1961, special allowances are provided to salaried individuals for their children's education and hostel expenses which are: 

• Children’s Educational Allowance: An allowance of INR 100 per month per child is allowed for up to two children studying in an educational institution.

• Hostel Expenditure Allowance: An allowance of INR 300 per month per child is given for up to two children staying in hostels.

What are the Types of Fee Reimbursable under Section 10(14)?

The following types of fees are reimbursable under Section 10(14) of the Income Tax Act, 1961:

• Tuition fees

• Examination fees

• Fees levied for specialized courses in agriculture, electronics, music, or any other field.

• Other fees that are necessary for the child's education

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

Eligibility for Income Tax Deduction for Tuition Fees under Section 80C:

• Who is Eligible: Only a parent or guardian can claim this deduction. This includes fees paid for an adopted child.

• Individual Assessee: Only individual taxpayers are eligible for this deduction. Hindu Undivided Families (HUFs) and corporates are not eligible.

• Number of Children: A maximum of two children per parent. If both parents are taxpayers, they can claim deductions for a total of four children.

• Maximum Limit: The maximum deduction limit is Rs 1.5 lakh per financial year.

• Maximum Age: There is no minimum age requirement for the child.

• Tuition Fee: The deduction is applicable only for full-time education fees. It does not include development fees, donations, private coaching fees, or other expenses like hostel and library charges.

• Recognized Institution: The educational institution must be situated in India and must have the necessary affiliations.

• Deduction Mode: The deduction is available only on actual payment, not on a payable basis.

Note: The deduction is applicable only for the taxpayer's children, not for the taxpayer or spouse.

Which Educational Expenses are not Eligible Under Tuition Fees Deduction?

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 80C. 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?

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

It is important to note that the deduction can only be claimed for the actual amount of fees paid and not for the amount of fees that are due to be paid.

How to Claim Income Tax Deduction on Tuition Fees Expenses?

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

1. For Salaried Individuals

   Salaried individuals must provide their employer with the school fees receipt for the full year along with the completed Form 12BB. This form is an investment declaration by salaried persons detailing all tax deductions and exemption claims, including those for tuition fees, and income tax computation. These documents should be finalized and handed over before the financial year concludes.

2. 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 a relevant fee receipt document.