To promote education in India, the govt allows for Income Tax Deduction under Section 80C & Section 80E. Deduction under Section 80C is allowed for payments made by self and deduction under Section 80E is allowed for Loan taken for the purpose of Education.
In this article, we would mainly be focusing on the Deduction available for payment of Children Education Fee through own sources for which the deduction is available under Section 80C. For deduction available for payment of Fees through Education Loan, kindly refer this Article on Deduction under Section 80E for Payment of Fees through Education Loan.
Deduction under Section 80C for Payment of School/College/Education Fees
Deduction under Section 80C can be claimed for various payments/ investments. One of the payments for which deduction can be claimed under Section 80C is the deduction for payment of Education Fees paid for the Education of Children. Any person who has paid Education Fees of his Children is allowed to claim this deduction under Section 80C.
The actual total fee paid by a parent in a financial year for the education of his children is allowed to be claimed as a deduction under Section 80C. However, the maximum total deduction allowed under Section 80C is limited to Rs. 1,50,000.
There are several other deductions which can also be claimed under Section 80C and the maximum total deduction allowed under Section 80C is limited to Rs. 1,50,000. Some of the popular deductions available under Section 80C are as follows:-
- Deduction for investment in PPF Account
- Deduction for Repayment of Home Loan
- Deduction for Investment in Tax Saving Fixed Deposit
- Deduction for Investment in National Saving Certificate
- Deduction for Investment in Mutual Funds
Relevant Points regarding Deduction u/s 80C for Payment of Children Education Fees
Deduction for Payment of Tuition Fees is only available to an Individual and not available to HUF.
- Deduction for How many Children?
Deduction for Payment of Tuition Fees is allowed for a maximum of 2 Children. In case of more than 2 children – deduction can be claimed for payment of tuition fees of any 2 children.
However, it is pertinent to note here that both husband and wife have a separate limit of 2 children each. Therefore Husband can claim deduction for payment of fees of 2 children and wife can also claim deduction for payment of fees of 2 children and therefore the family can claim deduction of 4 children.
- Deduction available on Payment Basis
The Deduction under Section 80C for payment of School Fees is available on Payment Basis. Therefore, irrespective of whether the fee is being paid for the previous years or for future years, deduction would still be allowed. In other words, the deduction would be allowed in the year in which the fee has been paid.
- Deduction not available for Part-time Courses
Deduction under Section 80C for payment of Tuition Fees is only available for Full Time Courses. Therefore the fee paid for Part Time Courses or for Distance Learning Course won’t be eligible to be claimed as a deduction.
- Payment made for Private Tuition/ Coaching Class not eligible for Deduction
Deduction is only allowed for Payment made to University, School, College or any other Education Institute. Payment made for Private Coaching/ Coaching Centres is not eligible for deduction.
- Deduction available for Education in India only
This Deduction is available for Payment of Fees for Education in India only and not for Education abroad. However, in case of fees is paid to an Institute located in India which is affiliated to a Foreign University – the deduction would be allowed in this case.
- Fee paid for Pre-Nursery/Nursery/ Play School allowed as Deduction
The Fee paid to a Play School or Creche or any other School for Pre-Nursery/Nursery Education is allowed to be claimed as a Deduction under Section 80C (Circular 9/2008 & 8/2007)
- Deduction not available for Education of Self or Spouse
This deduction for payment of Education Fees is only available in case the payment is made for the Education of Children. Payment made for the Education of Self or Spouse is not eligible to be claimed as a deduction under Section 80C.
Expenses related to Children Education which are not allowed to be claimed under Section 80C
The following expenses may be incurred for facilitating the education of children, but they are not allowed to be claimed as a deduction under Section 80C.
- Development Fee or Donations or Building Fund
- Transport Charges, Hostel Charges, Mess Charges, Library Fees
- Late Fees is not eligible for Deduction
- Fees paid to Coaching Centres/ Private Tutors
- Payment of Fees for Education outside India
The above list is only an example of the expenses which are not allowed to be claimed as Deduction under Section 80C as these are not paid as Education Fees. Although these expenses are indirectly related to facilitating the education of the children – but these are not allowed to be claimed as a deduction.
In other words, only the fees paid as Education Fees is allowed to be claimed as a deduction. Therefore other payments like Parent Teacher Association Fees, Staff Benefit Fund, Fees for Games etc. also won’t be allowed to be claimed as a deduction as these are not paid as Education Fees.
Other Relevant Points regarding Deduction for Payment of Children’s Fee
- This Deduction would be available for Adopted Child also as the law does not limit this deduction to Biological Child only.
- If the fee of a child is being paid by both the Mother and the Father – both of them would be eligible for Income Tax Deduction of the amount actually paid by them.