Deductions on Educational Expenses
Cost of Education of children has gone up substantially in the recent years. However, there are certain deductions eligible for education expenses under Income Tax Act, which to some extent can lessen the burden of high education expenses.
Example:
Ajay is having two children staying in hostel, of which one is studying in school and the other one in college. He has availed an education loan for Rs. 8 lakhs to meet the expenses of his son studying in college. He also pays an interest of Rs. 1 lakh during the year.
Let us see the various provisions, under the Income Tax Act, providing tax relief to Ajay.
| Section | Nature of Expenses | Conditions | Amount of deduction | Tax Savings *(Rs) |
| 10 (14) | Children Education Allowance
Allowance given to meet the hostel expenditure |
For maximum of 2 children
For maximum of 2 children |
Rs.100 per month per child
Rs.300 per month per child |
2966 |
| 80 C | Tuition fees | Paid to school, college, university or other educational institution, situated within India, for the purpose of full time education of any two children of an individual
Tuition fees should not include payment towards development fees or donation |
Rs.100000 per annum | 30,900 |
| 80 E | Interest on loan for higher education | a) Only interest on loan taken from banks or any approved charitable institution, for the purpose of pursuing higher education for self / spouse / children.
b) Higher education means full time studies for graduate or post graduate course in engineering, medicine, management , applied sciences or pure sciences including mathematics and statistics but does not include humanities, social sciences, commerce, accountancy or law. |
100% of interest paid on loan (in this case Rs.1,00,000) with out any monetary limit.
Deduction is allowable for the initial year and for 7 successive years or until the interest on such loan is paid by the tax payer in full whichever is earlier. |
30,900 |
|
Paid to school, college, university or other educational institution, situated within India, for the purpose of full time education of any two children of an individual |
