Children Educational Allowance, Section 80C tuition fee deduction—See how you can claim tax benefit of up to ₹4.38 lakh

The Income-tax Act (ITA) provides tax exemption for Children Education Allowance provided to salaried individuals by the employer to covers tuition fees for up to two children in a given financial year and within specified limit, under the old tax regime.

Further, there is also provision for deduction under Section 80C of the ITA up to ₹1.5 lakh for two children within a financial year, under the old tax regime.

Notably, CEA and tuition fees deduction are two separate tax benefits that can be claimed by salaried taxpayers. The total relief available from both is up to ₹4,38,000. See below for calculations:

CEA: What are the prescribed limits and conditions?

As per Section 10 of the ITA, CEA is allowed for a maximum of two children, with up to ₹3,000 per month, per child. This works out to total exemption of ₹72,000 annually for two children's educational fees.

Further, there is provision for hostel expenditure allowance, which can be claimed up to ₹9,000/month per child, which totals to ₹2,16,000/year for two children.

There is no maximum age for the children, and the exemption is open for fees paid to a school, college, university or other educational institution within India.

Notably, Children Education Allowance (CEA) is not applicable under the new tax regime.

Tuition fees deduction under Section 80C: Who can claim?

This deduction can be claimed by a parents or guardians for actual tuition fees of up to two children, paid within a financial year, to a school, college, university or other educational institution in India.

Only available under the old tax regime, the deduction is capped at ₹1.5 lakh total for both children in a financial year.

According to a Clear Tax report, the deduction is available only on tuition fees paid during the financial year. If payment is pending, deduction is not allowed.

Non-eligibility of Tuition Fees Deduction under Section 80C

• Not available for payment of part-time courses.
• Not available for payment made by self, by spouse, by brother or by sister, or for father or for mother or any other relative.
• The school, college, university or other educational institution has to be within India.

• Only available under the old tax regime, cannot be claimed under the new regime.

How to claim CEA, tuition fees deduction?

• Salaried individuals can claim both (CEA and tuitions fees deduction) by submit fee receipt as proof. The payment must also declare in Form 12BB or claimed at time of filing your income tax returns (ITR).
• Non-salaried individuals (self-employed, freelancers, businesspeople, etc.) can only claim tuition fee deduction under Section 80C. The tuition paid must be declared in ITR and fee receipts maintained as proof in case of inquiry. As per Clear Tax, it is not mandatory to submit the documentation.

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