Tax Benefits On Children Education Allowance

Minimizing the tax liability is always a burning topic for any Taxpayer/Assessee (Indian salaried or self-employed) who is ready to make utmost efforts to lower its taxable income. Besides, accountancy manipulations the Government has provided numerous options/clauses which exclude a certain amount from the gross income.

Covering domains of insurance and investment, the Government has also provided a separate focusing on child education, i.e., Children Education Allowance (CEA). Talking about this tax benefit, this article will unfold all the aspects of the education allowance granted to a taxpayer for their children. Addressing said subject, the writer will brief about the scope covered by the department and clauses/sections enumerated in the statute, i.e., Income Tax Act, 1961 (Act). Further, eligibility criteria for claiming tax benefits under child education allowance. Lastly, the best possible measures for taking full benefits from this tax benefit is suggested for taxpayers’ children's education.

Education Allowance: Deduction in Taxable Income
Considering the importance of education, the Government gives tax benefits by deducting a certain amount as CEA, which an Assessee can use (each parent) having children either biological or adopted. It is important to note here that it’s not a grant given by the Government, as it’s a tax benefit that can be claimed by deducting a fixed portion while computing the taxable income. Expenses incurred in children's education should be levied as fees/charges by the school directly as tuition, admission, library, uniform, shoes, hostel, etc. but not development or transportation. 

Children Education Allowance: Scope 

Tax benefit given in said clause is not limitless; as can claim it only up to the fixed limit, namely;
1. Rs. 100/- per month for education;
2. Rs. 300/- per month as hostel expenditure (if exist)
There are two conditions for claim abovesaid deductions. Firstly, can use expenses for two kids. The next condition is expenses incurred for kids education has to be existed in India as per section 10 of the Act.
Besides the aforementioned basic deductions, the cumulative deduction in section 80C of the Act can also claim a maximum limit of Rs. 1.5 lacs. The reason for not mentioning said claim in the above point is that said claim covers numerous domains like life insurance, mutual funds, public provident funds, etc.

Who can claim CEA Deductions?

Before claiming any tax benefit, Assessee should check the eligibility criteria and check whether the condition falls in those conditions. Same are entailed as below:

1. The Assessee should be an Indian salaried or self-employed person but not a corporation/firm or even Hindu Undivided Family (HUF); who acting as parent/guardian/ sponsor may be married/single/divorced/widow/widower; 
2. Claim tax benefit for two kids; however, if both parents are earning and having more kids, then they can claim a deduction for a maximum of 4 children;
3. Educational institute, i.e., school or university/college, must fall in Indian denomination with no affiliation set criteria;
4. Kids must be enrolled in the full-time course though it can be kinder garden or crèche but not coaching institutes.

CEA Deductions based on actual expenses

While taking tax benefit of CEA, eligible Assessee should possess evidence, i.e., receipts signifying actual expenses done towards their children. Hence, anyone can’t claim such a deduction considering it is right, but the amount deducted from their income must be spent beforehand while computing the taxable income. 


Understanding the tax deduction benefits enumerated in the Act and other initiatives like Sukanya Samridhi Yojna, it is quite clear that the Indian Government is aware of the importance of education. However, the education system has expanded so much, but the Government is still fixed with its conventional structure, creating a huge gap between these two spheres. However, taxpayers make long-term plans for their children’s education with other tax-saving plans in mutual funds. But the Government should also come forward and revise its old plan and be more comprehensive with the upcoming education culture.

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