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Tax benefit on Tuition Fees elucidated

In case you are not aware, under the Income Tax Act you are eligible for certain tax benefits on the tuition fees paid by you during a given Financial Year.

Let us explore the specifics of this tuition-fee tax break.

It is a Section 80C deduction
Tax benefit on tuition fees is covered under section 80C of the Income Tax Act.

Section 80C allows you to claim tax deduction up to a limit of Rs.1.50 lakhs provided you
(a) invest this amount in certain "specified" investments and / or
(b) spend this amount for certain "specified" purposes.

One such specified expense is the 'Tuition Fees'.

In other words, you can claim tax deduction on the amount paid by you towards tuition fees. And since the maximum allowable deduction u/s 80C is Rs.1.50 lakhs, it automatically becomes the limit for the tuition fees too.

Children's education only
This tax benefit is limited to the fees paid towards the education of your children only.

Any expense incurred on your own education or your spouse or any other person is NOT eligible for this tax break.

Only up to two children
Further, this tax benefit is limited to the fees paid towards two children only.

Interestingly, you and your spouse can separately claim this tax deduction. So logically, as a family, you get to claim tuition fee tax deduction for up to four children.

Full-time education only
Also, only the fees paid towards full-time education is eligible. 

No deduction is allowed for the fees paid for either the part-time courses or the distance learning programmes.

Only proper educational institutions in India are covered
Fees paid to any University, College, School or such other educational institute is eligible. Amounts paid to coaching classes or private tuition would be disallowed. However, pre-nursery, play school and nursery are covered for tax deduction.

Further, these educational institutions should be situated in India. So no tax deduction if your child is studying abroad. However, institutions in India affiliated to foreign institutes are eligible.

Prohibited expenses
Only the "tuition fees" charged by such institutions is allowable as deduction.

Development fees, donation, building fees, hostel / mess charges, transport charges, library fees etc. cannot be considered for tax deduction.

Only for individuals
This benefit is available to the individual taxpayers only. HUFs are not eligible for the same.

Benefit on payment basis
This deduction can be claimed for the amount paid during the year. Whether it pertains to previous or future years is not relevant. In other words, the benefit is available only in the year in which the actual payment has been made.

This, in a nutshell, is the tax benefit available to you for the tuition fees paid towards the education of your children in India.

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