Understanding Tax Deduction on Educational Expenses

Hello and welcome to Part 12 of the Income Tax education series brought to you by H&R Block, the global leader in filing Income Tax Returns. Today we will understand if you can get a deduction of expenses made for your children’s education.

Children’s education is getting costlier by the day. You can claim a deduction for the amount of tuition fees paid to any educational institution for the purpose of full time education of your child under section 80C. The amount of this deduction is however limited to the amount of tuition fees only and does not include any development or donation paid. E.g. you pay an amount of Rs. 60,000 as the total fees for the year for your child but the tuition fee portion amounts only to Rs.40,000 then the deduction u/s 80C will be restricted to only Rs. 40,000. The amount paid towards donation, non-refundable deposits or canteen expenses is not allowed as a deduction. Deduction is allowed for up to 2 children for each parent.

Apart from this there is one more deduction that you can claim u/s 80E of the IT Act where you can claim interest paid on loan taken for higher education. The entire amount paid as interest can be claimed as deduction without any limit. E.g. if you take a loan of Rs. 5,00,000 for your child’s MBA and the interest repayment per year @ 10% amounts to around Rs. 50,000 then this entire amount can be claimed as a deduction from taxable income u/s 80E.

I hope you found this useful. If you have any further questions on this topic, please feel free to ask us using #AskBlock.
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