The tax benefits for education are enlisted under two main provisions of the Income Tax Act – Section 80C and Section 80E. Both of these sections not only provide tax benefits to the taxpayers but also promotes education in India. Thereby, it gives momentum to the Government’s scheme: Padhega India, Tabhi toh badega India.
Tax Benefits for Education under Section 80C
As per the provisions of Section 80C, the taxpayer can claim a deduction on the payment of tuition fees of his children. However, this deduction is available for a maximum of two children and the maximum deduction amount is Rs. 1.5 lacs.
The deduction on tuition fees under Section 80C is not exclusive and is available along with other eligible investments like tax-saving fixed deposits, LIC premium, home loan repayment, etc.
What all education is covered for the purpose of Section 80C?
To claim tax benefits for education under Section 80C, the education of the taxpayer’s children should be going on from any school, college, university, or any educational institution in India. In other words, education outside India or education expenses in coaching institutes are not eligible for tuition fees deduction under Section 80C.
FAQs (Section 80C)
The deduction under Section 80C on tuition fees can be claimed only for two children. Further, these children can be of the taxpayer’s choice. Therefore, you can claim deduction under Section 80C only for two children.
There is no restriction under the Income Tax Act for claiming deduction by both parents on the children’s education. However, double expenditure for the same children’s tuition is not permissible. Therefore, in case the tuition fees of the children exceed the limit of Rs. 1.5 lacs, the other parent can claim the deduction on the remaining amount.
The deduction on tuition fees under Section 80C is available only on tuition fees for the taxpayer’s children. Therefore, no deduction on tuition fees is allowed under Section 80C for self education or someone else’s education.
Tax Benefits for Education under Section 80E
Apart from the deduction on tuition fees under Section 80C, the taxpayer can claim tax benefits for education on interest paid on education loans for higher education under Section 80E. Moreover, the deduction under Section 80E is also permissible for higher education outside India.
What is higher education for purposes of Section 80E?
Higher education for the purposes of Section 80E means any educational course undertaken after the completion of Senior Secondary Examination.
How much deduction is available under Section 80E & for how much time?
There is no maximum or minimum limit for claiming deduction under Section 80E. Further, the deduction under Section 80E is permissible for a period of 8 Assessment Years or till the payment of loan amount, whichever is earlier.
How is Section 80C different from Section 80E?
Section 80C is different from Section 80E because of three reasons:
Firstly, under Section 80C, the deduction is available on the tuition fees of a maximum of two children. The payment of these tuition fees are in the school, university college, or educational institution in India. On the other hand, Section 80E deduction is available on the interest payment on education loans for higher studies. Further, the higher studies can be within or outside India.
Secondly, under Section 80C deduction wrt education is available only on tuition fees of children. Whereas, under Section 80E the higher education can be of the taxpayer himself, his spouse, children, or legal guardian.
Thirdly, in the case of deduction under Section 80C, the maximum limit is Rs. 1.50 lacs. Conversely, under Section 80E, there is no such limit and the whole amount of interest payment on an education loan for higher studies is permissible as a deduction.
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