Tax Benefits on Tuition And School Fees

Parents can claim tax benefits on tuition and school fees under Section 80C, 80E & Section 10(14) of the Income Tax Act, 1961. This deduction helps taxpayers reduce their taxable income by claiming expenses incurred for their children’s education. This guide explains eligibility, deduction limits, and rules for claiming tuition fee deductions, ensuring you maximize tax savings while investing in your child’s education.

Table of Contents:

• ⇾ Deductions on Educational Expenses as per Income Tax
• ⇾ Section 80C
• ⇾ Section 10(14)
• ⇾ Section 80E
• ⇾ Tax Benefits on Children’s Education in 2025
• ⇾ Eligibility For Tuition & School Fee Deduction
• ⇾ Expenses That Are Not Covered
• ⇾ Reimbursable Fees on Children’s Education
• ⇾ Tips To Claim Tax Benefits on Tuition & School Fees
• ⇾ Maximizing Tax Benefits for Education Expenses
• ⇾ Comparison of Old vs. New Tax Regime: Which is best for you?
• ⇾ Frequently Asked Questions

Deductions on Educational Expenses as per Income Tax

As per the Income Tax Act 1961, there are several sections in action dedicated to the support and enforcement of these laws in a helpful way for the public. The deductions are explained under Section 80C, which allows a deduction of maximum ₹1.5 lakh per financial year.

There are other benefits under other sections, like Section 10(14) and Section 80E, which also enable the eligible people to avail further deductions or allowances.

Tax Deduction on Tuition Fees Under Section 80C

Section 80C is also known as Section 80C deduction, as it allows a deduction up to ₹1.5 lakh as per the Income Tax Act, 1961.

Here are some of the key features of Section 80C:

• A deduction of up to ₹1.5 lakh per year for up to two children, including other eligible investments like PF, PPF, LIC, ELSS, home loan principal repayment, etc.
• Applicable only for full-time education in schools, colleges, or universities in India.
• Covers only tuition fees, not any other expenses like development fees, donations, or transport charges.

Eligibility for Section 80C reduction

1. Individual taxpayers and Hindu Undivided Families (HUFs) can avail themselves of deductions under this section.
2. The deduction applies only for tuition fees paid for up to 2 children per taxpayer.
3. The educational institution must be located in India.
4. The course must be full-time and include nursery, preschool, primary, secondary, and higher education.

Tax Deduction Under Section 10(14)

Section 10(14) is mainly related to the CEA (Children’s Education Allowance) and hostel allowance, which was launched to provide tax exemption on allowances given by employers for children's education.

Here are some of the key features of Section 10(14):

• The Children’s Education Allowance can be up to ₹100 per month per child (i.e., ₹1,200 per year per child).
• The hostel expenditure allowance can be up to ₹300 per month per child (i.e., ₹3,600 per year per child).
• The exemption applies irrespective of actual tuition fees paid, but any additional amount is taxable.

Eligibility for Section 10(14) Reduction

The Section 10(14) reduction on CEA and hostel allowance is comparatively easier to obtain, with fewer eligibility criteria than the Section 80C reduction.

1. Only salaried employees receiving Children’s Education Allowance (CEA) from their employer can claim this benefit.
2. Available for up to two children per taxpayer.

Tax Deduction Under Section 80E

Section 80E is related to education loans, as it provides tax benefits on education loan interest for higher education.

Here are some of the key benefits:

• There is no upper limit on the amount of interest deduction. However, this is dependent on the bank and loan aspects.
• The deduction only applies to the interest component; the principal EMI amount stays unchanged.
• The benefit is available for a maximum of 8 years or until the loan is fully repaid, whichever is earlier.

Eligibility for Section 80E reduction

1. This is available for individual taxpayers (not HUFs or companies).
2. The loan must be from a financial institution or an approved charitable organisation.
3. The deduction applies to education loans taken for oneself, a spouse, children, or a legal ward.
4. The course must be higher education, including graduate, postgraduate, and professional courses in India or abroad.

Tax Benefits on Children’s Education in 2025

As of the assessment year 2025, the government continues to support the parents and the students in achieving high-quality education within the country by various methods. These are as follows:

1. Children’s Education allowance: Parents can claim up to ₹100 per month for a child for educational purposes under Section 10(14).
2. Hostel expense allowance: An exemption of ₹300 per month per child is available for hostel expenses, limited to two children.
3. Tax Deduction on Tuition Fees: Parents can claim a deduction for tuition fees paid up to ₹1.5 lakh per financial year under Section 80C of the Income Tax Act.

Eligibility For Tuition & School Fee Deduction

Although the government provides these options to support Indian citizens, there are certain eligibility criteria that one must meet to claim these benefits.

To claim deductions under Section 80C for tuition and school fees, the following criteria must be met:

1. Types of Taxpayers

Only individual taxpayers (parents) can claim this deduction. Each parent can claim for up to two children, allowing a maximum of four children per family if both parents are taxpayers.

2. Type of Education

The deduction applies to tuition fees paid for full-time education. This includes pre-nursery, nursery, primary, secondary, and higher education.

3. Educational Institutions

The fees must be paid to any recognised educational institutions in India. Either public or private, the institution must be recognised by the respective authorities.

Expenses Not Covered for Tax Deduction

Certain expenses are not eligible for reductions under Section 80C of the Income Tax Act 1961. These include expenses like:

1. Development Fees

This is the fee collected from students for the development of the facility. This is mostly found in private institutions.

2. Donation Fees

Certain private institutions ask for donations towards the institution's growth at the time of enrolment. This is not considered for reduction or reimbursement under any section.

3. Extracurricular fees

Charges availed from students for any extracurricular activities such as sports or any other activities not part of the regular curriculum are excluded

4. Other Expenses

Expenses such as transportation, library charges, mess fees or late payment fines are not excluded under this section. Besides that, fees paid for education abroad, and private coaching classes fees are also not included.

Reimbursable Fees on Children’s Education

Under Section 10(14), certain allowances related to children's education are exempt from tax. These include:

• Children's Education Allowance: An exemption of ₹100 per month per child, up to two children.
• Hostel Expenditure Allowance: An exemption of ₹300 per month per child, up to two children.

These allowances are provided by employers as part of the salary package and are in addition to the deductions available under Section 80C.

Tips to Claim Tax Benefits on Tuition & School Fees

To claim deductions for tuition and school fees:

• Documentation:

It is best to maintain receipts of tuition fee payments made to the educational institution.

Ensure that the receipts mention the amount paid, the name of the child, and the institution's details.

• Filing the Return:

While filing the income tax return, provide the necessary details of the tuition fees paid under the deductions section.

• Employer Declaration:

Salaried individuals should declare the tuition fees paid to their employer and submit the receipts when submitting investment proofs.

This will help adjust the Tax Deducted at Source (TDS) accordingly.

When to Claim Tax Benefits on Tuition & School Fees

Under Section 80C of the Income Tax Act, people who paid tax can claim deductions for tuition and school fees in the same financial year. This means that the deduction is available on a payment basis, allowing taxpayers to claim the benefit in the year they pay the fees.​

For example, if you pay tuition fees in April 2024 for the academic term ending in March 2024, you can claim the deduction in the financial year 2024-25.

Maximizing Tax Benefits for Education Expenses

Education expenses are important and can be a bit expensive, but the Income Tax Department of India offers various provisions to help taxpayers reduce their tax liabilities. Here's how you can optimize tax benefits related to education costs:​

1. Utilise Section 80C deductions on tuition fees.
2. Claim Section 80E Benefits to reduce interest on loans.
3. Leverage Section 10(14) exemptions on CEA and hostel rent allowances.
4. Maintain Accurate Documentation
5. Coordinate between parents as individual taxpayers.
6. Stay Informed About Policy Changes

Understanding and effectively utilising these provisions, taxpayers can reduce their taxable income. This will help reduce the financial burden associated with education costs.​

Comparison of Old vs. New Tax Regime

As per the new regime, you cannot have the benefits mentioned in Sections 80C, 80E, and 10(14). However, taxpayers can choose between the old tax regime and the new tax regime every financial year.

The rules differ for salaried individuals and business owners:

Key Considerations When Choosing a Regime:

• If you claim deductions for tuition fees (80C) or education loan interest (80E), the old regime is better.
• If you don’t claim deductions and prefer lower tax rates with less paperwork, a new regime is better.
• Salaried individuals can switch each year based on their deductions, while business owners have a one-time switch restriction.

Fill Form 10IE or Form 10IEA to choose from new or old tax regimes