Tax planning: Claiming tax rebates on children’s school fees

How children’s school fee can help you optimise 80C tax deductions

The old tax regime is likely to lose favour with many taxpayers from financial year 2025-26, owing to the liberalisation of the new tax, minimal exemptions, regime slabs and rates in Budget 2025 by the Finance Minister, Nirmala Sitharaman.

If you have decided to switch to the new tax regime in April, you need to plan your tax-saver investments available currently only under the old regime, carefully before March 31.  For example, do not buy a life insurance policy solely to claim deduction under section 80C, if you are not likely to choose the old regime next year. In any case, such policies should never be purchased with the tax break in mind.

Put simply, do not buy  any products that necessitate long-term, recurring payment commitments or come with long lock-in periods if the only objective is tax saving, especially if you are planning to opt for the new regime next year.

Also read: Looking for tax-savers ahead of March 31? Check out these small saving schemes that offer 80C deductions

Tax deductions on expenses

However, even if you have chosen the old regime this financial year and want to maximise tax benefits, you needn’t always scour investment avenues eligible for tax-savings. Some expenses, too, qualify for deductions under Section 80C.

The section offers tax breaks on school/college tuition fees paid for up to two children, subject to the maximum limit of Rs 1.5 lakh. For example, fees paid towards your children’s education. It is an unavoidable expense for parents, so it makes sense to avail of this deduction before considering any further investments.

Also, even if the number of children is, say, three, both spouses can still maximise the tax benefits on offer since both partners have separate limits of two children each. In addition, do note that even your kid’s playschool, creche or nursery tuition fees are also eligible for the deduction.

Know the expenses that will not qualify  

While claiming this deduction, it is vital to know the education-linked expenses that are not considered eligible. For example, any capitation or donation fees and school bus charges will not qualify for the tax break. The key word is ‘tuition’ fee – look for this element in your child’s fee receipt. However, expenses incurred on children’s education at overseas institutions cannot be claimed as tax benefits under this section, though entities in India affiliated to international universities will be eligible.

Also read: From school fees to study abroad: A fool-proof plan for your child's education

Extracurricular activity classes, even if they are managed by the school, will not be eligible. The deduction is available only for full-time courses in formal educational institutions — part time or distance learning fees will not be allowed. Likewise, coaching class fees will not be taken into account.