Tuition fees paid to a university, college, school or educational institution located in India for full time education are eligible for tax deduction under section 80C of income tax act, 1961.
Income tax deduction limit for tuition fees is within the overall limit of section 80C. For the financial year 2022-23 (Assessment Year 2023-24) and financial year 2023-24 (Assessement Year 2024-25), overall icnome tax deduction limit of section 80C is Rs 1, 50,000.
In this article, we will discuss, how to avail income tax benefits on tuition fees paid to university, colleges, schools or educational institutions and what are the conditions you need to satisfy in order to claim the tax deduction.
To get eligible for income tax deduction on tuition fees, taxpayer is required to satisfy following conditions as specified in section 80C.
Types of educations and institutions covered for tax deduction U/S 80C
As per section 80C, in order to get eligible for income tax deduction, tuition fees must have been paid for a full-time education, including for any play school activities, pre-nursery and nursery classes. You can refer circular number 9/2008, 8/2007.
Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes.
Tuition fees must have been paid to any registered university, college, school or any other educational institution based in India.
Such educational institution can be a private or government sponsored institute.
Maximum Limit On Number of children for tax deduction on tuition fee-Section 80C
Tax deduction on tuition fees under section 80C can be claimed only up to two children.
If both parents are paying tuition fees, then both of them will be eligible based on the actual amount paid.
For instance, if you have 3 children then one person can avail tax deduction on tuition fees under section 80C for 2 children and other person can take benefit for the third one. You can plan according to your total income and applicable income tax rates.
Example
If total tuition fees paid for 3 children during the financial year 2023-24 (Assessment year 2024-25) is Rs 2, 00,000 and you want to claim the entire expenditure under section 80C as tax deduction then you can do so only when both parents have paid it.
If husband has paid Rs 1,50,000, then he can claim deduction of Rs 1,50,000 for the financial year 2023-24 (assessment year 2024-25) and wife can take tax benefit of Rs 50,000 under section 80C by paying it to the institution. Provided all other conditions of section 80C are satisfied.
Remember, to get deduction under section 80C, you must have paid tuition fees during the financial year. You will not be eligible for the benefits of section 80C if its not paid.
What tuition fees are tax deductible U/s 80C?
Only tuition fees out of the total fee paid by you will qualify for tax deduction.
It is clarified vide circular number 17/2014, dated December 10, 2014, that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.
This means, payments like development fees or donations or late fee or capitation fees or payment of similar nature does not qualify for tax deductions under section 80C.
Please note, section 80C tax deduction is available to you if you have opted to pay tax based on old tax regime. If you have opted for new tax regime under section 115BAC, then benefits of section 80C will not be available. Which means tax deduction on tution fees under section 80C will not be available to you if you have opted for new tax regime under section 115BAC.
You need to consider the upper limit specified under section 80C while calculating tax deduction amount of tuition fees along with other eligible investments as listed in the said section. Here are few investments eligible for section 80C deduction within the overall limit of Rs 1,50,000 for the financial year 2022-23 (assessment year 2023-24) and financial year 2023-24 (assessment year 2024-25);
