Education Fee and Taxation

Education is a fundamental right of every individual in the country and as the development is taking place so rapidly there is always a requirement of skills, good knowledge and efficient individuals which is only possible if majority are literate. But the critical part is the fees or the amount which needs paid for gaining that education, specially Higher education which is extremely expensive nowadays. Every year there is a hike in education/tuition fees in the schools, colleges, education institutions etc that is a matter of concern for all the parents and students who cannot afford such exorbitant knowledge.

Although Government has taken some initiatives and measures to tackle this problem at some extent that might be a relief for the people.

In this article I will discuss the taxation measures on Education Fees. Is there any benefit from Tax in Tuition Fees ? If yes then Who can avail the benefits ? What are the criteria ?  and all of that in brief.

Tuition Fee/Education Fee .

Income Tax Act defines Section- 80C as Deduction in respect of certain payments.

80C (xvii) as tuition  fees (excluding any payment towards any development fees or donation or payment of similar nature), whether at the time of admission or thereafter,-

  • to any university, college, school or other educational institution situated  within India;
  • for the purpose of full- time education of any of the persons specified in sub-section (4)

Tuition fee is the charge or fee paid for instruction or teaching , as at a private school or a college or university. Certain deductions are allowed in Income Tax for the payment of Fees which can be availed by the tax payers towards education his/her children.

Criteria of Tax Exemption.

  • As the definition states fees paid in the form of tuition fees at the time of admission of the children to any university or education institutions or schools established in India.
  • Any educational institutions which has a purpose of providing full-time education. It can be either be a private institution / school or a Government sponsored.
  • As the section provides Fees paid as tuition fee for full-time education is applicable. Fee paid towards Part-time education, Distance learning education or any part time courses is prohibited.
  • In some schools there are other payments which need to be paid apart from the tuition fees, payments like development fees or donation or capitation fees, etc., those are not covered and do not qualify for tax benefit.
  • If the fees is not paid on the provided time, the applicable late fee paid will also not be eligible for Tax benefit.
  • Only individuals or salaried persons are entitled to tax deduction, Hindu Undivided family and corporate are not eligible for the same.

Who can avail the benefits ?

  • Parents who are paying the fees of the children studying in the schools or colleges can get an aid from Tax through Section-80C of the Income Tax Act.
  • If both the parents are working and are taxpayers then both can claim for the tax benefits separately for the children for the amount paid as the tuition fees.

Limit for Tax benefit.

The tax benefits comes with certain Limitations which needs to be taken care of by the Tax payers while claiming the deductions.

  • Deductions are eligible only for two children per assessee. If both parents are taxpayers, then they can claim deductions for 4 children. If there is a single individual who is a taxpayer tax payer he/she cannot claim the fee paid towards educating more than 2 children as deduction.
  • This deduction is only eligible for payment of fees of the children. Fees paid towards educating anyone else, including himself/herself or a spouse cannot be claimed as deductions.
  • Theamount of tax benefit is within the overall limit of the section of Rs 1.5 Lakh a year.

For instance,

If two salaried individuals pays tuition fees of Rs. 50,000 and Rs 1.5 Lakh respectively towards educating two children which comes upto Rs. 2 Lakh combined. Then both of them can avail the tax benefit separately as per the amount paid by them.

– Swati Srivastava, Advocate

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Qualification: LL.B / Advocate
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Location: Ghaziabad, Uttar Pradesh, IN
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January 2021