“Learn how to claim tax rebate on school fees under Section 80C in India. Compare old vs. new tax regimes, eligibility, and tips to maximize savings on education expenses.”
One of the biggest financial commitments parents make to their kids is education. Budgets for families may be strained, though, by the growing expense of school fees. The good news is that Indian tax regulations allow you to claim school fee rebates, which will help you save money and secure your child’s future. The relevant provisions of the Income Tax Act, how to claim tax rebates on children’s school fees under the old and new tax systems, and money-saving advice will all be covered in this blog article.
Tax Rebates on School Fees: Overview
By lowering your taxable income, tax refunds or deductions help you pay less in taxes. Under certain provisions of the Income Tax Act, school fees in India may be eligible for tax benefits. But the availability of these advantages is contingent upon your choice between the old and new tax regimes.
Tax Rebate On School Fees Under the Old Tax Regime
Section 80C of the Income Tax Act of 1961 allowed parents to deduct taxes from their children’s tuition under the previous tax system. This is how it works:
Eligibility Criteria
- The deduction can be applied to up to two children’s tuition payments.
- The government or local authorities must acknowledge the school.
- In India, tuition must be paid for full-time studies.
- Deductions are not available for donations, development fees, or transportation costs.
Maximum Deduction Limit
Every financial year, a deduction of up to ₹1.5 lakh is permitted under Section 80C. EPF, PPF, life insurance premiums, ELSS, and other investments and costs are all included in this limit.
How to Claim the Deduction
- Save the school’s acknowledgements and fee receipts as evidence of payment.
- If necessary, make sure the institution offers a certificate of tuition payment.
- When submitting your Income Tax Return (ITR), include the amount paid under Section 80C.
Example
You are eligible to claim ₹50,000 under Section 80C if you spent ₹50,000 for your child’s tuition. Assuming a 31.2% tax rate, this lowers your taxable income by ₹50,000, potentially saving you up to ₹15,600.
Tax Rebates on School Fees Under the New Tax Regime
Introduced in Budget 2020, the new tax regime eliminates most deductions and exemptions, including those under Section 80C, but offers reduced tax rates. What you should know is this:
No Deduction for School Fees
- Children’s school fees are not eligible for tax deductions under the new tax regime.
- This implies that you are not eligible for any reimbursements for the tuition you spent for your child’s schooling.
Lower Tax Rates
Although there are no deductions under the new regime, the tax rates are lower than under the previous one. For instance:
- Income under ₹2.5 lakh is tax-free.
- Tax rate for income between ₹2.5 lakh and ₹5 lakh is 5%.
- Tax rate for income between ₹5 lakh and ₹7.5 lakh is 10%.
- Tax rate for income between ₹7.5 lakh and ₹10 lakh is 15%.
- Tax rate for income between ₹10 lakh and ₹12.5 lakh is 20%.
- Tax rate for income between ₹12.5 lakh and ₹15 lakh is 25%.
- Tax rate for income above ₹15 lakh is 30%
Selecting Between the New and Old Regimes
- The previous tax system would have been more advantageous if you had large expenses, such as school fees.
- You may save more money under the new tax regime with reduced tax rates if your overall deductions, including school fees, are small.
Key Differences: Old vs. New Tax Regime
| Aspect | Old Tax Regime | New Tax Regime |
|---|---|---|
| Deduction on School Fees | Available under Section 80C (up to ₹1.5 lakh) | Not available |
| Tax Rates | Higher tax rates with deductions | Lower tax rates without deductions |
| Best For | Individuals with high deductions | Individuals with minimal deductions |
How to Maximise Your Tax Savings on School Fees
- Assess Both Regimes: Determine which regime saves you the most money by comparing your tax liabilities under the two using an online tax calculator.
- Keep Records: To claim deductions under the previous regime, keep accurate records of fee receipts and certificates.
- Plan Investments: If you choose the previous system, make sure you combine school fees with other qualified investments to optimise your Section 80C limit.
- Examine Additional Benefits: Examine additional tax advantages associated with education, such as Section 80E interest deductions for student loans.
Frequently Asked Questions (FAQs)
- Can I receive tax breaks for more than two children’s tuition?
No, only tuition expenses paid for up to two children are eligible for the Section 80C deduction. - Can taxes be deducted for nursery school fees?
Yes, provided that the fees are for full-time instruction and the school has official recognition. - Is it possible to transition annually between the previous and current tax regimes?
Yes, each fiscal year, salaried individuals have the option to select between the old and new regimes. Businesses and professionals, however, are required to adhere to a single regimen for the whole of the year. - Does paying for college have any tax advantages?
Section 80C does not allow for the deduction of college costs. On the other hand, Section 80E allows you to deduct interest paid on student loans.
Conclusion
Your tax liability can be greatly decreased by claiming tax rebates on your children’s tuition, however the availability of these benefits varies depending on whether you choose the old or new tax regime. While the new regime offers reduced tax rates but no deductions for school tuition, the previous regime allowed you to claim deductions under Section 80C.
Examine both regimes, keep accurate records, and look into additional education-related tax incentives to get the most out of your tax preparation. By doing this, you may maximise your tax savings and make sure that your child’s education doesn’t become a financial burden.
Disclaimer
This blog post’s content is meant primarily for general informational purposes and should not be construed as expert financial, legal, or tax advice. Individual circumstances can change, and tax laws are subject to change. For individualised advice, readers are encouraged to speak with a certified public accountant or tax counsellor. Any liability for acts based on the information in this post is disclaimed by the author and publisher. Always check with the Indian Income Tax Department for the most recent tax regulations.