Maximizing deductions for education expenses
What's the story
As the cost of education continues to skyrocket, it's more important than ever to understand how you can claim tax deductions for education expenses.
This blog post breaks down the complex world of the Income Tax Act of India, focusing on the specific sections that provide deductions for education expenses.
It will empower you to decrease your taxable income by making smart choices about claiming these deductions.
Section 80C
Understanding Section 80C for tuition fees
Under Section 80C of the Income Tax Act, you can claim deductions for tuition fees paid for a maximum of two children, up to a limit of ₹1.5 lakh per year.
This deduction is only applicable for full-time courses in Indian schools and colleges, and only covers actual tuition fees.
It does not include development fees, donations, or payments for private coaching classes.
Section 80E
Availing deduction under Section 80E for education loans
If you have taken an education loan for higher studies, the interest paid is deductible under Section 80E.
There's no cap on the deduction amount, but it's available for a maximum of eight years from the year you start repaying the loan or until the interest is fully paid, whichever is earlier.
Uniforms and books
Exploring benefits under Section 10(14)
Section 10(14) read with Rule 2BB of the Income Tax Act provides for deductions in respect of allowances provided by an employer to defray personal expenses incurred in performing duties.
This encompasses allowances received for buying uniforms mandated at school or college and textbooks.
That said, these deductions come with certain conditions and limits, which are determined by your employer as per the government rules.
Children's allowance
Claiming deductions for children's education allowance
Under Section 10(14), parents can claim deductions for children's education allowance received from their employer.
Each parent can claim up to ₹100 per month for a maximum of two children.
Plus, a hostel expenditure allowance is exempt up to ₹300 per month per child, again for two children.
These allowances apply to direct education costs such as tuition and hostel fees, not personal expenses like clothing or stationery.