With the financial year coming to an end , most of us have our tax liabilities on our mind and are trying to maximise our tax benefits. Taxpayers with children can take advantage of extra tax benefits for the fee paid for their children. Here are the details of the tax exemption you can claim.
Children’s Education Allowance (CEA)
The income tax department allows Rs.100/month per child for a maximum of 2 children.You can claim a minimum exemption of Rs.1200 or a maximum of Rs.2400 annually.
There is no minimum age to claim CEA, however, the upper age limit of the child is 20 years or till the time of passing 12th class, whichever is earlier. But, in the case of a physically challenged child, the upper age limit is 22 years.
Hostel Education Allowance
Further, you can claim an additional Rs.300/month per child for a maximum of 2 children, if the child/children goes to a boarding school. You can claim a minimum exemption of Rs.3600 or a maximum of Rs.7200 annually under this head.
Note: The allowance is only allowed for institutions located in India irrespective of their affiliation with national/international board or university.
Under Section 80C, a parent can also claim an exemption on the tuition fee paid to any educational institution for a full-time educational course including nursery school, creches and play schools.The maximum deduction is limited to Rs 1.5 lakh including the deduction with respect to insurance, provident fund, pension etc. in a financial year.
The deduction is available to a maximum of 2 children for each parent. Therefore, a maximum of 4 children’s deduction can be claimed.
This exemption too, is only allowed for institutions located in India irrespective of their affiliation with national/international board or university. The institution has to be recognized by the Central or State Government or UT administration or by University or a recognized educational authority having jurisdiction over the area where the institution is situated.
Want to know how much exemption you can claim for the educational expenses you have incurred? Here’s the calculator to help you calculate your savings today!
Bonus: Want more tax saving tips? Click here to know 5 Lesser Known Tax Saving Tips
See you until next time!