Education is imperative and we all know how much it costs to study in different educational institutions. Did you know that an individual taxpayer is entitled to income tax benefits in relation to the fees of education according to the provisions of the Income-Tax Act, 1961? India’s First Free Online Financial Advisory Moneymindz
1. Education and hostel allowance of children
Employers provide allowances to employees who need to shell out money for meeting expenses related to education and hostel expenses of an employee’s children. Such allowance is exempt from tax under Section 10(14) of the ITA, as under: Get Personalized Advice On Education Loan From Kuber Mindz or Give A Miss Call On 022-62116588
- Children Education Allowance: Rs 100 per month per child up to a maximum of two children
- Hostel Expenditure Allowance: Rs 300 per month per child up to a maximum of two children.
- The tax exemption is subject to the condition that the individual can substantiate the claim by providing the employer with appropriate documentary evidence towards expenditure incurred.
The tax exemption is subject to the condition that you are in a position to substantiate the claim by furnishing the details of the incurred expenditure to the employer.
2. Tuition fees
You can claim a tax deduction for tuition fees paid to any educational institution in India for two children. However, payments made towards development fees or donation etc will not be eligible for deduction under this Section. The deduction for tuition fees is covered under Section 80C of the I-T Act and is subject to an overall ceiling limit prescribed under this section including other deductions such as contribution to PPF(Public Provident Fund), Life Insurance, etc.
The maximum limit cannot be more than the prescribed limit of Rs150,000 regardless of how much more you have paid. India’s First Free On call Financial Advisory Moneymindz
3. Deduction on interest on education loan
You can also claim a deduction for interest payments on Education Loan for pursuing higher education of either you or specified family members like spouse or children or the student for whom you are the legal guardian. This deduction is available under Section 80E of the ITA for a period of 8 years.
4. Tax exemption for scholarships
If you or the said student receives any scholarship for meeting education costs, that is exempt from Income Tax under Section 10(16) of ITA. Smart Financial Advisor, Kuber Mindz
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