Your child's education can help you save tax: Eligibility, rules, limits for school and hostel fee exemption

School fees are one of the biggest expenses for many families, but the good news is that some education-related expenses can also help you save tax, provided you meet the eligibility conditions laid down by the income tax department.

Under this provision, employees can claim a tax exemption on children education allowance and hostel allowance received from their employer.

Separately, tuition fees paid for a child's education can also be claimed as a deduction under Section 80C. However, these exemptions and deductions are only available to those opting for the old tax regime.

The income tax rules 2026 have significantly increased the eligible exemption limits for children's education allowance and hostel allowance compared with the previous limits. Here's a look at who can claim these benefits, the revised limits, and the conditions that apply these education-related allowances.

Who is eligible to claim children's education allowance as a tax exemption?

The exemption limit and applicability of the education-related tax benefit under the latest income tax framework is as follows:

• Who can claim it: Salaried employees receiving allowance for their children's education from their employer.
• Number of children: Exemption is available for a maximum of two children.
• Exemption limit: ₹3,000 per month per child (maximum ₹72,000 a year for two children).
• Hostel expenditure allowance: If the child stays in a hostel, an additional exemption of up to ₹9000 per month per child can be claimed (maximum ₹2,16,000 a year for two children).
• Maximum age: No upper age limit has been prescribed.
• Eligible institution: The child must be studying at a university, college, school or any other educational institution located in India.

This deduction is specifically allowed for tuition fees only and does not cover payments such as development fees, donations, transport charges, or any similar expenses that are not eligible under Section 80C.

Eligibility of tuition fees deduction under Section 80C

Taxpayers paying any fees towards the education of their children can claim tax deduction under Section 80C, given they meet the following criteria:

• Number of children: Fees paid for 2 children can be claimed as a deduction.
• Maximum limit: Up to ₹1.50 lakh every financial year can be claimed, which includes 2 children combined.
• Mode of deduction: The deduction is available only on tuition fees that is already paid during the financial year.

This deduction is not available for fees paid for part-time courses or foreign education. This benefit is also not available if a taxpayer is paying the school fees for themselves, spouse, siblings, parents or any other relatives.

How to claim tax exemption for education-related deductions?

To claim the exemption, salaried employees should submit the fee receipts issued by the school or educational institution to their employer while furnishing investment proofs and declare the details in Form 12BB.

If the exemption is not claimed through the employer during the financial year, it can still be claimed while filing the income tax return (ITR).

The due date to file tax return for most individual taxpayers, which include salaried individuals, pensioners, and those without business income, for the financial year 2025-26 (AY 2026-27) is July 31, 2026.