Budget 2023 Expectation: Will govt hike Income Tax deduction on Tuition Fees from Rs 200?

Budget 2023: The government allows taxpayers to claim tax deduction on tuition fees under Section 10 (14) of Income Tax Act as Children's Educational Allowance. The Section offers an additional tool for taxpayers to save their tax.

As per provision, salaried taxpayers can save tax to the tune of Rs 100 per month per child. This amount can be availed for a maximum of 2 children per taxpayer, which means that an individual taxpayer is eligible for tax exemptions of Rs 200 per month. In a financial year, a taxpayer can claim for deduction of Rs 2400.

The rule says that the amount can be claimed as exemption only in the financial year in which the fee was paid.

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In addition to this, the government allows taxpayers to claim exemption on hostel payment for children. This is capped at Rs 300 per month per child. A taxpayer can claim for maximum of 2 kids.

Eligibility under Section 10 (14)

The allowance is provided to a person employed in India only.

The allowance in the form of education fees deduction in income tax is provided only when expenses are incurred within India.

For Children’s Education Allowance, no Minimum age is prescribed for claiming reimbursement.

The maximum age to claim this reimbursement for any normal child is 20 years, while for specially-abled children, it is 22 years.

The school or institution should be recognized by the Central, State, Union Territory, or any recognized educational authority.

The tuition fee deduction is applicable for up to two children. Each individual can claim income tax deductions for up to two children for the paid tuition fees. If the husband and wife are both individual taxpayers, then in such a family, the income tax benefit for a total of four school-going children can be claimed, provided all the children go to schools located in India.

Education fee deduction in income tax can be claimed by any taxpayer who is a legal guardian of school-going children, due to adoption or the absence of parents.

Tuition fees for income tax purposes can also be claimed by single parents and unmarried guardians of school-going children if they are sending their children to authorized schools located in India.

Anil Singhvi's take

Zee Business Managing Editor Anil Singhvi said that it was in 1997-98 when the government had last made changes. He said that the government should consider increasing the limits to provide some relief to the taxpayers. He said that the limit should be at least hiked to Rs 2000-3000.