Section 80C Tuition Fees for Children
It cannot be denied that the cost of educating children is increasing day by day which is definitely a matter of concern. In this circumstance, the major relief is the tax benefit that is provided for the expense on the children’s education. The income tax act incorporates a direct deduction on the fees paid for the education of the dependent children. The act also provides the deduction for the interest on the loans that are taken up for the higher education of children.
Facts covered under 80C:
There is a certain amount that can be claimed and the amount was previously 1 lakh rupees which has been raised to 1.5 lakh rupees in the present amendment made in the financial year 2015-16. At the same time there are certain conditions that need to be fulfilled for attaining the tax exemptions.
Any amount that is paid towards the life insurance premium for you and also your spouse or your children can also be included within the deduction of section 80C. But you need to remember that the insurance premium paid by you for your parents or the in-laws are not included within the section 80C tax exemption. In this regard, it can be mentioned that if both the husband and wife are employed, then the tax deductions will qualify for both of them separately. This means both of them are eligible for claiming the tax exemptions for two children each. The equated monthly installments paid by you every month for repaying the home loan comprises of two components, principal and interest. The principal part of the total EMI is included within the section 80C. But, the claim for deduction can be made only after the total possession of the house has been attained through repayment and it might begin when the property is even under construction. Please read about Child Education Plans.
Know the “no exemptions”
On the other hand, there are no deductions allowable for the assessee if he/she makes claims for their personal expenditure for higher studies. This is one major clause under section 80C which states that the assessee is solely responsible for his/her tuition fees and there won’t be any tax reductions for their own studies. Also there is not any deduction available for the tuition fees of the spouse.
It needs to be remembered that the 80C tax deductions is not at all eligible for the private tuition classes and the tax exemptions shall be applicable only for the full time courses. Thus, the fee paid for the part time courses are also not eligible within the 80C section. The deduction within this section is applicable depending on the payment; the fees might be related to any time period. This means, the fees that needs to be paid on April, if paid on March 2009, it will be eligible for tax exemption under 80C within the specific year. But late fees shall not be allowed for any deduction.
Allowance of foreign affiliation
The universities, schools or colleges must be situated in India for the allowance of tax exemption but it can be affiliated by foreign countries. This is a major advantageous feature for a huge number of people. If you are concerned about whether the pre-school or the nursery fees can be claimed under the tax deduction, then you can rest assured that the play school, nursery and pre-nursery class fees are included under the section 80C.
Considering the tax deduction, it shall not be affected if the child/children are not by birth. This means, the deduction is applicable for adopted children also as the law is not limited for biological child only. If the payment of the tuition is being carried out by both mother and father, then both of them are eligible to claim for the tax deduction according to section 80C.
Now, there are certain questions that has been raised by different individuals, for instance, whether an unmarried individual or a single parent is applicable for the tax deduction claims under section 80C, the answer is definitely he/she can. Because the law is regarding the children of the individual and not for the person claiming the deduction. Section 80C is completely silent regarding the legality of the child and does not require being a legal child. Thus, it does not matter whether the individual claiming for the deduction is a single parent, divorcee or having any other marital, legal or professional issues.
In case you have purchased any NCSs (National savings certificate), the accrued interest granted by the authorities is definitely eligible for the deductions within section 80C.
To be completely precise regarding the exemption of taxes, the fees for games, stationery, magazines, parent teacher association fees, gratuity fund, staff benefit fund or the hostel funds are not at all eligible for tax exemptions.