Tuition fees paid by parents for their kid’s education come with tax benefits. The amount paid as tuition fees qualifies for tax benefit under section 80C up to a maximum limit of Rs 1.5 lakh per annum. It means, under income tax rules you are allowed to deduct the fee amount from your gross total income, thus reducing the taxable income. Effectively, you pay a lower tax than before if you are paying tuition fees for your children.
But, before you take advantage of tuition fee in your income tax return, ensure they are eligible for tax benefit under section 80 C. As per the rules, they have to be a full-time education, including any play school activities, pre-nursery and nursery classes. The institution can be either private or a government sponsored one. Further, tuition fees paid at the time of admission or anytime during the financial year to any university, college, school or other educational institution qualifies for tax benefit. The educational institution has to be based in India.
Any payments, other than tuition fees, to the educational institutions will not be eligible for tax benefit. For example, payments like development fees or donation or capitation fees, etc., are not covered and do not qualify for tax benefit. Also, if parents have failed to pay tuition fees on time, the applicable late fee paid will not be eligible.
Importantly, the tax benefit on tuition fee applies for the fees paid for up to two children. So if a couple has four children and are taxpayers, both can claim tax benefit as both have a separate limit of two children each. It is only the parent who makes the payment gets the tax advantage. If both parents are working and are taxpayers, both can claim individually up to the amount of fees paid.
While tuition fee tax benefit is incidental, do have a separate investment plan to save for children’s long term goals such as higher education and marriage.