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Deduction for Children Education & Tuition Fees - Tax Benefits Under Section 80C

Updated on: 16 Jan, 2024 05:49 PM

India's literacy rate is 77.70% (2021 and 2022). To further promote education and healthcare, the Income Tax department has laid the framework for certain allowances, exemptions, and deductions that you can claim on the money earned in a financial year. One such allowance is Children's Education Allowance. There is a lot of relevant information that everyone who intends to pay tax under this category should know. Children’s education becomes a huge deal for the parents in terms of finance therefore, there are various benefits that the taxpayers can entertain.

The tax benefits that can be availed on children's education are as follows:

  • Childrens' Education Allowance
  • Hostel Expenditure Allowance
  • Tax deduction on tuition fees

Allowances for Children’s Education and Hostel Expenditure

As per Section 10(14) of the Income Tax Act 1961, special allowances are given to salaried individuals to cover their children's education and hostel expenses.

  • Children’s Educational Allowance: An allowance of INR 100 per month is allowed per child for up to two children studying in an educational institution.
  • Hostel Expenditure Allowance: An allowance of INR 300 per month per child for up to two children is given to those staying in hostels.

Note: You can claim this allowance only in the financial year the quoted Educational Fee was paid.

*The given allowance is provided to a person employed in India only.

** The allowance is provided only when expenses are incurred within India in accordance to Section 10(14) of the Income Tax Act 1961.

***The Allowances are subject to change as per any future Income Tax Act, 1961 amendments.

Types of Fee reimbursable under Section 10(14)

According to OM No. 12011/03/2008-Estt(AL), which is dated 2.9.2008, the types of Fee that are eligible for reimbursement are:-

  • Tuition Fee
  • Admission Fee
  • Special Fees charged for agriculture, electronics, music, or any other subject
  • Fee charged for practical work under the program of work experience
  • The fee is paid for using any appliances or any form of aid.

Non-eligibility of tuition fees deduction Section 80C

Section 80C of the Income Tax Act provides various deductions for certain eligible investments and expenses, but it does not allow a deduction for tuition fees. Here's the non-eligibility of tuition fees deduction under Section 80C:

  • Nature of Section 80C: Section 80C allows deductions for specified investments and expenses up to a maximum limit of Rs. 1.5 lakh in a financial year. It includes investments in instruments like Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificate (NSC), Equity-Linked Savings Scheme (ELSS), and more.
  • Other Sections for Deductions: Taxpayers may explore other sections of the Income Tax Act to avail deductions for various expenses and investments not covered under Section 80C. For example, Section 80D offers deductions on health insurance premiums, and Section 80G allows deductions on donations made to certain charitable organizations.

Eligibility criteria to apply for exemptions under Section 80C

No Minimum age is prescribed for claiming reimbursement of the Child Education Allowance fee(CEA) with respect to children admitted to nursery classes. While for physically challenged or specially-abled children, there used to be a minimum age barrier of 5 years for vocational training, which stands removed as of 21st February 2012. So there is no minimum age whatsoever for any CEA fee reimbursement claims.

The maximum age for any average child is 20 years for claiming reimbursement under CEA, while the maximum age for specially-abled children is 22 years.

* All of the above-mentioned information is in accordance with the information according to O.M. No.12011/07(ii)/2011-Estt. (AL) as dated 21.02.2012.

Eligibility for School or the Institution your child is studying in

The School institution in question has to be recognized by the Central Government, State Government, or by UT Government by any University or a recognized educational authority having jurisdiction over the area where the institution in question is situated. These conditions also apply with respect to the children studying in the two classes before class 1, i.e., nursery, LKG, and UKG.

* All the data provided is in accordance to OM No.12011/03/2008-Estt.(AL) dated on 23.11.2009 as released by the Government of India.

Children's Educational Allowance for Employees of the Central Government

The Children's Education allowance is payable to “Central Government employees including citizens of Nepal and Bhutan, who are employees of Government of India, and whose children are studying native place ” for their children. However, there is a need for a certificate by the Indian Mission in the specific country confirming the recognition of this educational institution by the educational body with jurisdiction over the area where the institution is situated.

Tax Deduction on Tuition Fees under Section 80C

Apart from Children’s Education fee, a separate Tax Deduction can be claimed on the Tuition Fee paid by parents for their children's education.

This deduction includes any Tuition Fee paid at the time of admission or any other time to a registered School, College, or University based in India. This tax deduction can be claimed for the purpose of Full-time education under Section 80C of The Income Tax Act. It should be noted that this tax deduction benefit is available for both Salaried and Self-employed individuals.

Note: The tax deduction provision provided under Section 80C of The Income Tax act includes a wide foray of investments such as life insurance premiums, Public Provident Funds, mutual funds, etc., along with Tuition Fee, all with a cumulative limit of Rs.1.5 lakh.

Eligibility for Tuition Fee Tax Deduction under Section 80C

Tax-paying individuals who wish to claim a Tax deduction on Tuition Fees under Section 80C must satisfy the conditions for eligibility given below:-

  • Individual Assesses only: This Tax deduction can only be claimed by individual assesses and not by HUF(Hindu Undivided Family) or Corporates.
  • Limit: The maximum permissible limit under Section 80C of the Income Tax Act 1961 is Rs.1.5 lakh with deductions eligible only for two children per assessee. If both parents are taxpayers, they can claim a tax deduction for up to 4 children. Otherwise, an individual assessee cannot claim for more than two children.
  • Child Education Only: Tax Deduction can be claimed towards educating the children exclusively. The fee paid towards educating anyone else, including spouses and the person themselves, cannot be claimed as deductions.
  • Full-Time Courses Only: Tax deduction on Tuition fees can only be claimed for full-time courses, be it school, graduation, or post-graduation. The fee paid towards part-time education cannot be claimed as a deduction.
  • Affiliated Institution: The school, college, or university the child is studying should have the necessary affiliation with the necessary educational body. This deduction is available only if the fees paid are in India.

How to Claim the tax benefit on Tuition Fee paid for Children?

There is a set of steps that you need to follow to Claim tax benefits on Tuition fees, and the following steps will guide you in claiming your tax benefit.

  • Submit the receipt issued by the educational institution for the payment made in the current financial year to the employer
  • Show the Tuition Fee paid in form 12BB before submitting the proof at the end of the financial year.
  • For any individuals other than salaried individuals, they have to claim the deduction under the VI-A schedule by showing the fee paid under section 80C during the filing of an income tax return.

Note: It should be noted that Educationa allowance under Section 10(14) and Tax Deduction for Tuition fees under Section 80C are two different provisions that can be claimed according to the prescribed limits under The Income Tax Act, 1961.

Educational Expenses that cannot be claimed under Tax Deduction

  • A tax deduction is not available towards payment of fees other than Tuition Fee, such as Donation Charges, Development Fee, Private Coaching Fees, Hostel Fee, mess charges, Library Fees, and henceforth.
  • A tax deduction cannot be claimed against the fee paid for part-time courses.
  • A tax deduction cannot be claimed for a school fee paid for a spouse, self, brother, sister, mother, or any other relative other than children.
  • The fee paid to any foreign institution for children’s education is not eligible to be claimed under this deduction.

You have learned about the benefits of claiming child education-related expenses under section 80C. Don’t miss this opportunity to save tax and invest in your child’s future. The deadline for filing ITR is 31st July, so hurry up and file your Income Tax Return now. Avoid the stress and errors of last-minute filing.

Frequently Asked Questions

Q- Is the reimbursement on Children's Educational Allowance for a third child permissible if it has not been claimed for 1st and 2nd child? Because as per OM dated 2/9/2008, CEA is admissible for two school-going children. Does it mean any two school-going children?

According to OM No. 12011/03/2008- Est. (AL) dated 11 .11.2008 Children's Educational Allowance would be permissible in the case of more than two children only when the number of children exceeds two as a result of second childbirth being twins or more. This means that CEA is applicable for the case of 2 eldest surviving children, plus CEA for third or subsequent children will only be permissible in the case of multiple births at the time of second childbirth. Furthermore, CEA can also be claimed for a 3rd child in the case of failure of sterilization operation. Such reimbursement is admissible only for the first childbirth after the failure of the sterilization operation.

Q- Can CEA be claimed for a child for the same class twice?

CEA doesn’t depend on the performance of the children in his/her class. Even in the case of failure in a particular class, CEA is still permissible. However, CEA is not permissible in the case if the child enrolls in the same class in another school even after passing the class or if he/she leaves in the mid-session.

Q- Is there any age limit for reimbursement of CEA with respect to children studying nursery classes?

There is no age limit with respect to minimum age (even play school fees) permissible for claiming CEA reimbursement for children in nursery classes. However, there is a maximum age limit for the same, which is stated as 20 years for normal children and 22 years for physically challenged and specially-abled children.

Q- Is CEA admissible to Government Servants who cease to be in service due to retirement, dismissal, discharge or removal from service during the course of the academic year?

CEA is admissible in such cases until the end of the current running academic year. The payment for the same shall be made by the Government Office in which the under-question official used to work before these events, and this shall be regulated by the other conditions laid out by the CEA Scheme.

Q- Will the Children of a Government Service Employee who dies during service be still eligible for CEA reimbursement under the new CEA scheme?

If and when a Government servant dies while in service years, the children education allowance or hostel subsidy will still be admissible to his/her children in observance of other conditions for its grant provided the spouse of the deceased official is not employed in any of the services of the Central Government, State Government, Autonomous body, PSU, Semi-government Organization such as Municipality, Port Trust authority or any other organization that is either partly or fully funded by the Central or the State governments. In cases such as these, the CEA/Hostel Subsidy will be payable to the Children till a time when the employee should have actually received the same, subject to the condition that other terms and conditions are fulfilled as well. The payment for the case shall be made by the office in which the Government Servant in question had been working prior to his death, and this shall be regulated by the other conditions laid down under CEA Scheme.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.