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Child Education Allowance

Children develop their skills through education. As a parent, you must invest a lot of money in schools and colleges. You can get tax exemptions for all your children's fees.

To ensure quality education, the Income Tax Department provides specific tax provisions. Thus, allowances ensure the quality of education for the children. To balance the fees incurred by schools, you can get a good tax return on education investment.
 

The best way to ensure quality education for children is through child plans. By doing so, you can combat the inflation in the cost of education.
 

In this blog post, we'll discuss child education allowances. These are based on tax provisions, their eligibility, and how to claim them.

Children's Education Allowance Deductions

The tax provisions that assist your CEA are listed below. It covers all fee structures like tuition, hostel, and extracurricular fees.
 

  1. Section 80 C of the Income Tax Act
  2. Section 10(14)
  3. Central Government employee category
     

These tax provisions are suitable for both salaried and contract workers. Let's look at the requirements in detail.


Children's Education Allowance Under Section 10 (14)  

Income Tax Act section 10(14) provides education allowances to all Indian employees' children get the education allowance under section 10(14).

The two types of fees which get the eligibility for tax exemptions are education and hostel fees.

 

  1. Education fee allowance

    If your family has two children, each will get ₹100 per month. Thus, a yearly exemption limits the rupee to ₹2,400.
     

  2. Hostel fee allowance

    If your children stay in the hostel for study, you will get rupee ₹300. Thus, the yearly exemption limit is ₹7,200.
     

    Thus, 9,600 per year is the upper limit for tax exemptions under section 10(14).
     

    Section 10(14) act covers the following fees in the schools.
     

    • Tuition fee (Fee-related to admission, practical, extracurricular activities)
    • Miscellaneous fee (if included in the school bill)
    • Books and notebooks fee
    • School uniform fee
       

    But, expenses on transportation and stationeries will not be eligible for reimbursement.

Eligibility for Children's Education Allowance

Twenty years is the maximum age limit for typical children. But, if your child is physically challenged, the maximum age limit is set as 22 years.
 

Nursery children have no age limit under section 10(14). However, differently-abled children must be five years old to claim CEA.

Eligibility criteria for Children's Education Allowance under 80 C
 

  1. Tax exemption for two children
    If you are a couple with two children, both children come under the tax exemptions. But, the maximum limit of exemption is 1.5 lakh.

  2. Adopted child tax exemption
    Even if you have an adopted child, their fee can be filed for tax return.

  3. Tax limit for a financial year
    The maximum tax limit for a financial year is 1.5 Lakh. However, if your spouse is also working, you can claim 3 lakh.

  4. Affiliation of the school
    Your children must be studying in a school with state or central government affiliation.

  5. Regular full-time studies
    Tax exemptions are available for students who are in full-time studies.

  6. Children's tuition fee
    The tax department only considers the children's expenses. Fees of other persons in your family, like spouses, siblings or parents, are not assessed.

  7. Institutions in India
    Your children should study in institutions in India, not foreign lands.

  8. Applicable only for school children
    Fees for school-going children are accepted for the tax exemptions. College fee or other study fee is ignored from the tax deduction.

Claiming Children's Education Allowance

Education allowance comes under sections 80 C and 10(14) differ. However, the claiming process involves submitting an application and proof of payment. The steps involved in claiming the education tax deductions are
 

  • For employees getting a salary

    Getting a bona fide certificate from your children's educational institution is necessary. In addition to that, the fee receipt covering all the school fees is needed.
     

    Note: Getting the relevant fee receipt for section 80 C and section 10(14) is necessary. Also, the claims can be done separately.
     

    The fee receipt and the declaration form of 12BB must be submitted to the employer. These are the investment proofs to present at the end of the financial year.
     

  • For contract or non-salaried workers

    If you are a non-salaried employee, you must claim the tuition fee under the VI-A schedule of section 80 C. You can file a usual income tax return without Form 12 BB. But, fee receipts or other payment proof from the education institution must be held back.

The Children's Education Allowance for Central Government Employees

If you are a central Government employee getting a salary under the 7th pay commission, this tax exemption is for you. You can claim your children's tuition and hostel fees.

Eligibility for the Children of Central Government Employees in Children Education Allowance

Your children must study in any educational institution recognized by the Government of India.     
 

Hostel fees can be reimbursed if your child stays 50 Km away from your posting area.

Let's look at a comprehensive table showing the fee allowances before and after the 7 CPC commission.
 

Kind of allowance

Before the 7th Central Pay Commission

After 7th major pay commission

Education fee

₹1,500

₹2,250

 

Hostel fee

 

 ₹4,500

 

₹6750

 

Taxation Rules

EPF Withdrawal Condition

Taxation Rules

More than Rs. 50,000 ( <5 years of service)

  • 10% of tax deduction if PAN is provided;
  • Otherwise, 30% TDS plus tax
  • If Form 15G/ 15H is submitted, no TDS

After completing 5 years of service

No TDS

Transfer from EPF to NPS (National Pension Scheme)

No TDS

Conclusion

Children's Education Allowance (CEA) is a significant step of the Indian Government in promoting literacy. Further, it alleviates the financial stress due to educational expenses.
 

You can utilize both Section 80 C and Section 10 (14) provisions against the fee payment for your children. Section 80 C covers tuition fees only. Other costs like transportation, books, and extracurricular fees can be claimed under section 10(14).
 

Check out the TATA AIA child insurance plans for securing your child's future education during emergencies. Also, insurance plans can be used as collateral for educational loans.

Want to Keep More of Your Hard-Earned Money? Speak to out expert

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

What is the amount of child education allowance?

The child education allowance for one child in a year is ₹ 1,54,800 per year, including section 80 C and (₹1.5 Lakh) and section 10 (14).

Can the children of retired persons be included in the tax exemption?

No, retired persons cannot make use of the tax provisions.

What Government schemes come under the tax exemption by section 80 C?

Sukanya Samridni Yojna is a girl’s savings scheme where you can claim up to ₹1.5 lakh annually.

Disclaimers

Generic Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed1 issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.