Income tax exemption on children education allowance
Children
Education Allowance (CEA) under section 10 (14) read with Rule
2Bb(2)(5) of the Income Tax Act is Rs.I00 per month per child.
This
limit as fixed more than 2 decades back when the maximum amount of
Children Education AIlowance for Central Government Employees was fixed
at Rs. 100/- per month per child under the IVth Central Pay Commission.
Now the current rate of this allowance is Rs.1000 per child.
Para
5.4 (A)(13) of Income Tax Circular dated 16.8.2011 indicates the
details w.r.t. “Tuition Fee” which can be claimed for deduction under
Section 80C. The same is reproduced below:
“A.
As per section 80C, an employee will be entitled to deductions for the
whole of amounts paid or deposited in the current financial year in the
following schemes, subject to a limit of Rs.1,00,000/-:
13.
Tuition fees, whether at the time of admission or thereafter, paid to
any university, college, school or other educational institution
situated in India, for the purpose of full-time education of any two
children of the employee.
Full-time education
includes any educational course offered by any university, college,
school or other educational institution to a student who is enrolled
full-time for the said course. It is also clarified that full-time
education includes play-school activities, pre-nursery and nursery
classes.
It is clarified that the amount allowable
as tuition fees shall include any payment of fee to any university,
college, school or other educational institution in India except the
amount representing payment in the nature of development fees or
donation or capitation fees or payment of similar nature.”
Apart
from Section 80c,Children’s education allowance up to Rs. 100 per month
per child for a maximum of two children and Hostel expenditure
allowance of Rs. 300 per month per child for a maximum of two children
is exempt from Income Tax. Hence 1200 only claim in this year. However
since a part of the allowance relates to previous year you can claim
relief under Section 89(1).
Source: CGEN.in
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