Budget 2023: Will Govt. increase Income Tax Deduction Limit on Tuition Fees from Rs.200?

The Union Budget 2023 is few days away and expectations of common man and taxpayers are very high from Finance Minister on Upcoming Budget this time.

Education is one of the important and major sector to concern about. To look into child’s education and minimize the expense that incurred in a effective way, is a responsibility of government of any nation, so that it won’t be a burden for any individual.

To encourage and to promote the importance of education amongst the citizen, the Income Tax Department on order of govt. introduced various tax benefits or education fees deduction in income tax. This aids the taxpayer in lowering their taxable income. The Government of India allows tuition fee deductions paid by individuals for their children.

Under Section 10(14) of the Income Tax Act, the government permits taxpayers to claim a tax deduction for tuition fee as a Children’s Educational Allowance. The Section provides taxpayers with an additional tool to reduce their tax.

Salaried taxpayers can save up to Rs.100 per month per child under the provision. This amount is available for a maximum of two children per taxpayer, implying that an individual taxpayer is entitled for Rs.200 in monthly tax exemptions. A taxpayer can claim a deduction of Rs.2400 in a financial year.

The rule stated that the amount can only be claimed as an exemption in the financial year in which the fee was paid. Furthermore, the government permits taxpayers to claim an exemption on child hostel payments. This is limited to Rs.300 per month per child. A taxpayer may file a claim for a maximum of two children.

Eligibility Under Section 10(14) to claim Tax Deduction:

• The allowance is provided to a person employed in India only.
• The allowance in the form of education fees deduction in income tax is provided only when expenses are incurred within India.
• No Barred on minimum age to claim this reimbursement for Children’s Education Allowance.
• The school or institution should be recognized by the Central, State, UT, or any recognized educational authority.
• The tuition fee deduction is available for up to two children. Individuals can claim income tax deductions for paid tuition fees for up to two children. If both the husband and wife are individual taxpayers, the income tax advantage for a total of four school-aged children can be claimed in such a household, providing all of the children attend schools in India.
• Any taxpayer who is a legal guardian of school-aged children owing to adoption or the absence of parents can claim an education fee deduction on their income tax return.
• Single parents and unmarried guardians of school-aged children can also claim tuition fees for income tax purposes if they send their children to authorised schools in India.

The government had last made changes in the year 1997-98. The government and Finance ministry should consider increasing the limits of tax deduction of tuition fees in this Upcoming Union Budget 2023, as it will give some relief to taxpayers. The limit should increase to Rs.3000/3500 per year.