Education Allowance Is Exempted For How Many Persons?
Exemption for education and hostel charges – Children education allowance covers 2 broad areas of expenses for the concerned employee – the costs incurred for schooling and education per se, and hostel charges. It has been pointed out by several leading experts on education policymaking that many Indian children are forced to leave school due to excessive hostel or similar accommodation charges.
Education allowance : This is fixed at Rs.100 each month for each child. Note that the exemption is limited only to 2 children. If CEA is applied for a 3 rd child, it will not be eligible for reimbursement.
Hostel charges allowance : Currently, this allowance is Rs.300 per child, only for 2 children of a family.
Section 10(14) of the IT Act of 1961 covers the details of costs incurred.
Section 80C and tuition fee exemptions
Section 80C makes it amply clear which overheads will come under children education allowance section and which will not. As of 2020, an individual can claim tax breaks on all sums paid as tuition fees deduction to schools, colleges, universities, and other educational institutions.
- Note that the exemption will be entertained only if these institutions are recognised by competent Central or State bodies.
- No exemption will be entertained for payments of ‘ development fees’, transportation costs, and any other amount which are not directly associated with educational purposes.
- Furthermore, CEA is payable up to Standard 12 as of 2020.
There have been a number of propositions from salaried individuals and education policy experts to extend this exemption to Graduate and Post-Graduate courses too. However, there has been no word from the IT Department or the Central Government on these latter demands.
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Contents
- 1 Is children education allowance exempted from income tax?
- 2 Who is eligible for children’s allowance?
- 3 What is basic exemption limit?
- 4 How many allowances married 2 kids?
- 5 Who can claim children education allowance exemption?
- 6 How much CEA is exempted from income tax?
Is children education allowance exempted from income tax?
Types of Exempt Income House Rent Allowance. Allowance on transportation, children’s education, subsidy on hostel fee. Exemption on Housing Loan. Income defined as per Section 10, Section 54 of the Income Tax Act, 1961.
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What is children education allowance in India?
The Government of India offers tax exemption of Rs.100 per child for a maximum of 2 children in a nuclear family for education purposes known as Children Education Allowance. For a normal child, the maximum age should be 20 years under this plan.
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Which of the following allowance is exempted?
There are various allowances exempt under Section 10 for Salaried Employees like House Rent Allowance, Leave Travel Allowance, Travelling Allowance, Uniform Allowance etc. We have already discussed the following allowances in our previous posts and in this post we would be focussing on certain special allowances which are covered under Section 10 (14). Recommended Read:-
House Rent Allowance Leave Travel Allowance
What is the maximum exemption under section 10?
Who Is Eligible to Claim Deduction Under Section 10 of the Income Tax Act? Usually, people below the age of 60 are eligible to get a basic tax exemption limit of ₹ 2.50 Lakhs. For senior citizens, the exemption limit is up to ₹ 3 Lakhs.
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Who is eligible for education allowance?
Who qualifies for CEA? The child’s highest age restriction for claiming CEA is 20 years or until the time of passing 12th grade, whichever comes first. However, in the case of a divyang child, the maximum age is 22 years. There will be no age limit for claiming the CEA.
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Can both husband and wife claim children education allowance?
The deduction is available to an individual for any 2 children. So, if the couple has more than 2 children and the husband and wife are filing separate returns, then the wife can also claim a deduction for the remaining children up to a maximum of 2 children. Was this article helpful?
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Who gets children education allowance?
CEA is paid to Central Government employees who have school-going children. What is the reimbursement provided under the CEA scheme? For every child, a CEA of Rs.2,250 per month is provided along with a hostel subsidy of Rs.
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Who is eligible for children’s allowance?
What is Child Benefit? Child Benefit is a monthly payment to parents or guardians of children aged 16 years and under. If your child is in full-time education, training or has a disability and cannot support themselves financially, you are entitled to claim Child Benefit up until your child turns 18.
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How much amount is example for each children for education allowance?
1. Educational Allowances as per Section 10(14) of the Income Tax Act, 1961 – According to Section 10(14) of the 1961 Income Tax Act, special allowances are provided to salaried people in order to help them pay for their children’s education costs and housing costs.
| Allowance | Exemption Limit |
|---|---|
| Children Education Allowance | ₹ 100 per month per child up to a maximum of 2 children. (This gives you a maximum exemption of ₹2,400.) |
| Children Hostel Allowance | ₹ 300 per month per child up to a maximum of 2 children. (This gives you a maximum exemption of ₹7,200.) |
With both of these tax benefits at your hands, you can lessen the impact of financial burden of your children’s education fees by up to ₹ 1,59,600(₹ 1,50,000 under Section 80C, ₹2,400 for children’s education allowance, and ₹7,200 for children’s hostel allowance). Note :
You can claim this allowance only in the financial year in which the quoted Educational Fee was actually paid. The given allowance is provided to a person employed in India only. The allowance is provided only when expenses are incurred within India in accordance with Section 10(14) Income Tax Act 1961. The Allowances are subject to change as per any future amendments in the Income Tax Act, 1961.
What are the 3 types of allowances?
How Can We Use Allowances to Save Tax? – As soon a person joins an organisation, she/he is provided with the breakup of the fixed salary and allowances. However, most of the times individuals are ignorant about taxation. But allowances can help employee save taxes provided they are placed in the salary intelligently.
- Salary restructuring is not possible in every organisation, but if possible, employees should try to include allowances which are non-taxable or are partially taxable in nature.
- This way they can reduce the tax liability to some extent.
- Thus, one should take note that through intelligent planning one can use allowances to save taxes and reduce the tax outflow.
Allowance : Allowances are basically a part of an individual’s salary package to cover the expenses that may incur in the course of his employment. For instance, a sales position profile may need an individual to travel extensively each day to meet with various clients.
- The employer will bear the costs associated with transportation, such as fuel costs, through transportation allowances.
- In a similar vein, a variety of different perks are provided to employees to enable them to work regularly and without too much difficulty.
- There are three different types of allowances.
These three types of allowances include: non-taxable, partially taxable, and taxable. Reimbursement : Payment made by the company to the employee to cover expenses is known as reimbursement. Reimbursements are connected to business expenses, and they don’t increase the employee’s revenue from their salary in any way.
- Therefore, there is no tax burden associated with reimbursements.
- A perquisite is a non-cash benefit granted by an employer to the employee.
- Under the Income Tax Act, a perquisite is defined as a benefit which an employee avails of or is entitled to on account of the employee’s job or position in the enterprise.
Obtaining perquisites has important tax consequences for the employee. Yes, this payment qualifies as a perk and must be counted as income in accordance with the law. Yes, salary arrears are taxed. However relief u/s 89(1) can be claimed.As per Section 89(1), tax relief is provided by recalculating tax for the year in which arrears are received and the year to which the arrears pertain; and the taxes are adjusted in the year in which they were due.
- In simple words, you do not pay more taxes if there was a delay in payment to you and you were in a lower tax bracket for the year you received the money.
- Note: Form 10E has to be filed before filing of the Income Tax It will be taxable if the leave encasement is obtained while the person is still employed.
However, after-retirement leave encasement is not taxable in the hands of government personnel subject to monetary limits as prescribed under the Income Tax act, 1961. Monthly Allowance is the monetary benefit that the employees get for meeting fixed monthly expenses like electricity bills, broadband, etc.
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What is 10 exempted income?
Under Section 10, there are different sub-sections that define what kind of income is exempt from tax. This can range from agricultural to house rent allowance. Any income that an individual acquires or earns during the course of a financial year that is deemed to be non taxable is referred to as ‘Exempt Income’.
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Is academic allowance taxable?
Section 10(14) (ii) – Allowance under Section 10(14) (ii) is provided to an employee for performing their duties under specific or unusual conditions. The actual amount eligible for an exemption is the mentioned allowance limit or the amount provided as an allowance, whichever is lower.
- Mountainous regions of Jammu & Kashmir, Himachal Pradesh, North East and Uttar Pradesh — 800 INR per month
- Common areas above 1000 metres or above — 300 INR per month
- Siachen region of Jammu & Kashmir — 7000 INR per month
Agency, Tribal, Scheduled areas Allowance: This allowance is provided to an employee for performing their duties in the tribal regions in the states of Tripura, Uttar Pradesh, Bihar, Tamil Nadu, Odisha, Assam, Madhya Pradesh, West Bengal or Karnataka — 200 INR.
- Allowances for the education of children: This allowance is given to help support the education of the children of the employee — 100 INR per month for every child (two children maximum).
- Allowance for personal spendings while performing their duties in the transport system: Allowance of up to 70% or up to 10,000 INR per month.
- Field Allowance: This allowance is given for work done in the regions of Nagaland, Manipur, Jammu & Kashmir, Sikkim, Andhra Pradesh, Uttar Pradesh and Himachal Pradesh — 2600 INR per month.
- Allowance for hostel expenses of the employee’s children: The employee gets an allowance of 300 INR per month for every child and maximum for two children.
- Transport Allowance for an on-duty physically challenged employee: 1600 INR per month.
- Transport Allowance for employees to commute between residence and work: 1600 INR per month.
- Compensatory allowance for performing duties in a modified field zone: Particular regions of North East, West Bengal, Jammu & Kashmir, Uttar Pradesh, Himachal Pradesh and Rajasthan – 1000 INR per month.
- Island duty allowance: This allowance is provided to defence forces who perform their duties in Lakshadweep and Andaman & Nicobar — 3250 INR per month.
- Allowance provided to defence forces for counter-insurgency cases: 3900 INR per month.
- Allowance for performing duty in an underground mine: 800 INR per month.
- Special compensatory allowance for performing duties in a highly active field zone: 4200 INR per month.
- Allowance for defence forces for performing duties in high altitude areas: 9000 feet to 15,000 feet – 1060 INR per month
- Above 15,000 feet – 1600 INR per month
What is basic exemption limit?
| S.N. | Threshold Limits |
|---|---|
| A. | Basic Exemption |
| 1. | Rs.2,50,000 |
| 2. | Rs.3,00,000 |
| 3. | Rs.5,00,000 |
Is 5 lakh tax exemption for everyone?
Conclusion – The amount you can claim as tax benefit depends on the maximum limit set for each exemption and deduction. One can use these tax benefits to arrive at a taxable income of less than Rs 5 lakh, even if the gross income is well above Rs 5 lakh.
Besides, these benefits can also be availed of by those whose gross total income is below Rs 5 lakh to begin with. Guide to filing your income tax return on your own Investors make capital gains when they sell their assets for a more excellent price than they paid for them. Long-term capital gains taxation differs between debt and equity funds.
While equity funds are tax-free on long-term profits, debt funds are taxed at a rate of 20% with indexation. You can legitimately save on long-term capital gains tax by following specific requirements outlined in the Income Tax Act Sections 54, 54EC, and 54F, as well as the Capital Gains Account Scheme.
- One of the essential requirements for avoiding capital gains tax is to reinvest the proceeds from the property sale in a residential property.
- Read this Premium Article to find out how to save tax on long-term capital gains.
- Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax or legal advice.
You should separately obtain independent advice when making decisions in these areas. Income tax is a mandatory tax in India that is paid to the Government of the nation. It is levied on your income and can differ based on the ITR tax slab you fall into.
There are two tax regimes in India. You can select the old regime or the income tax new regime, based on your preference. No income tax needs to be paid if your taxable income is below Rs 5 lakh in both the regimes, and yet there is a tax of 5% on income above Rs 2.5 lakh. This may seem like a conflicting statement.
The truth is, if your income exceeds Rs 2.5 lakh, you do need to pay income tax. However, if it doesn’t exceed Rs 5 lakh, this tax liability is cancelled out by a tax rebate. In other words, if your net taxable income does not exceed Rs.5 lakh, you are eligible for a tax rebate up to Rs 12,500 under section 87A.
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Can I claim education expenses for my child?
Whoever claims the student as a dependent is the only one who can claim expenses for the credits and deductions. You are not able to claim any education credits for a non-dependent child. To be able to claim education credit, the student in question must be a dependent claimed as an exemption on your tax return.
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What is the maximum exemption education allowance per year under Section 10 14 )?
Section 10(14) Education Allowance (Partially Exempt Income) – An allowance of up to INR 100 per month, per child, is tax-free under Section 10. Also, there is a hostel allowance for expenses that are made towards a child’s hostel fee, up to INR 300 per month per child. This exemption can be availed for two children only.
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How many Dependants can a married couple claim?
Qualifying Relative – If someone meets the IRS requirements to be your qualifying relative, you may claim them as a dependent. A qualifying relative does not have to actually be related to you, as long as they lived with you all year and they meet other requirements.
See the qualifying relative requirements or use our RELucator tax tool below. Answer a few simple questions and the tool will have your answer if you can claim a qualifying relative dependent: Find out if your relative (or other person) is a dependent now Generally, qualifying relatives are persons who you take care of during the year.
They can be an older relative, such as a disabled aunt or grandparent, or other qualifying person. Use the linked tool for specific answers to your situation before you begin filing your taxes on eFile.com, Once you are done with the tool, you can email your results to your self and opt to receive informational emails and eFile promo codes.
- See also: does my dependent need to file taxes? When Two or More People Claim a Dependent Generally, only one taxpayer (or married couple filing jointly ) may claim any one person as a dependent.
- The tax benefits for claiming a dependent cannot be split unless it is detailed in a divorce decree.
- If two or more taxpayers claim the same person as a dependent, the IRS will apply a set of tiebreaker rules to determine who has the legitimate claim.
In the case of divorced parents, the custodial parent usually has the right to claim the child as a dependent. The custodial parent may release this claim, allowing the non-custodial parent to claim the child, by attaching a written statement or Form 8332, Release of Claim to Exemption for Child by Custodial Parent,
- If you need to file this form, you can prepare your return on eFile.com, print it, and mail it to the IRS and include the Form 8332.
- If you need to eFileIT Form 2120, Multiple Support Agreement, you can easily add this form to your return and this form can be e-filed with your return.
- Form 2120 is an agreement between two or more taxpayers who share in the responsibility of caring for someone (usually an elderly or disabled relative) or who provide financial support for the same dependent, to allow the two taxpayers to take turns claiming the dependent.
Find out more about the tiebreaker rules for more than one person claiming a dependent,
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How many allowances married 2 kids?
Head of Household, 2 Children – If you are the head of the household and you have two children, you should claim 3 allowances. Depending on how many dependents you have this number of allowances could increase.
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Who can claim children education allowance exemption?
Conclusions – If you are an employee of a Govt. recognized company you can claim Children’s Educational Allowance under Section 10(14), as well as Tuition Fee Tax deduction under Section 80C of The Income Tax Act, 1961 and you, should claim them both for more benefits.
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Is children education allowance exempt under section 10?
1. Educational Allowances as per Section 10(14) of the Income Tax Act, 1961 – According to Section 10(14) of the 1961 Income Tax Act, special allowances are provided to salaried people in order to help them pay for their children’s education costs and housing costs.
| Allowance | Exemption Limit |
|---|---|
| Children Education Allowance | ₹ 100 per month per child up to a maximum of 2 children. (This gives you a maximum exemption of ₹2,400.) |
| Children Hostel Allowance | ₹ 300 per month per child up to a maximum of 2 children. (This gives you a maximum exemption of ₹7,200.) |
With both of these tax benefits at your hands, you can lessen the impact of financial burden of your children’s education fees by up to ₹ 1,59,600(₹ 1,50,000 under Section 80C, ₹2,400 for children’s education allowance, and ₹7,200 for children’s hostel allowance). Note :
You can claim this allowance only in the financial year in which the quoted Educational Fee was actually paid. The given allowance is provided to a person employed in India only. The allowance is provided only when expenses are incurred within India in accordance with Section 10(14) Income Tax Act 1961. The Allowances are subject to change as per any future amendments in the Income Tax Act, 1961.
Who can claim children education allowance exemption?
Conclusions – If you are an employee of a Govt. recognized company you can claim Children’s Educational Allowance under Section 10(14), as well as Tuition Fee Tax deduction under Section 80C of The Income Tax Act, 1961 and you, should claim them both for more benefits.
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Can I claim my child’s education expenses on my taxes in India?
Tax Hacks – How to avail tax benefit on Child’s Tuition Fees under Section 80C If you are a parent and your kids are attending school, you can claim the fee paid towards their tuition as a deduction from your total gross income. The tuition fee paid qualifies for tax benefit under Section 80C, and thus, you are eligible to claim up to Rs 1,50,000 as tax deductions.
This will also apply to parents who are paying for their kids’ full-time college education. If you are looking for maximising your tax returns; therefore, the tuition fee for the full-time education for your child can help reduce your total tax liability. For example, if your income is more than Rs 10 lakh, you would fall in the highest income bracket.
As a result, you would have to pay as much as 31.2 percent (30% + 4% cess on 30%) as income tax. However, if you are paying Rs 80,000 every year as your child’s school fee, you can declare this amount while filing your taxes and save as much as Rs.24,960 in that year.
Are all schools/colleges eligible? In India, if you are paying tuition fees for your child at the time of admission or anytime during the financial year to any college, registered university, educational institution or school, you are eligible to receive tax benefits. You must enroll your child in a full-time education program, including any pre-nursery, nursery classes and play school activities.
Moreover, the institution can be either government sponsored or a private one. Are all payments covered? There are times, when you would have to make payments, in addition to the tuition fees, to a school/college. However, payments made such as donations, development fees or capitation fees do not qualify for tax benefit under,
Moreover, if you didn’t pay the fees on time, the applicable late fee paid would not be eligible for tax deductions. Tax benefit on tuition fees for how many children? You can claim tax benefits on the fees paid for up to two children. Thus, if a couple has four children, both partners can claim the tax benefit since each has a separate limit of two children each.
Which parent would get the tax benefit? The parent who makes the payment is eligible to receive the tax advantage. In case, both parents are working, each one of them can claim separately, up to the total amount of fees paid. Therefore, if the tuition fee for your children is Rs 2 lakh, of which you paid Rs 1.5 lakh while your spouse has paid Rs 50,000, both of you can claim the amount individually for the total payment made by them.
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How much CEA is exempted from income tax?
CCA has no upper or lower ceiling and is completely taxable if the total value of the allowance exceeds INR 900.
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