Ways of saving tax without investment s through Children Education allowance in 2020

By | July 8, 2020

There are several provisions in the Income Tax Act, where an individual can save tax even when he/she has not invested in tax saving. One has to invest in tax-saving instruments such as NPS, Health insurance, fixed deposit, PPF, Life insurance, etc. Most of us are not aware of the various tax plans that can help us Tax reduction without making any new investment. March is a critical period for all taxpayers in India to assuring that due taxes have paid. Further delay of taxes would result in an interest charge when the tax paid later on. Not availing of any deductions would result in paying Income-tax to the government. In the Income-tax Act, you can claim a maximum deduction of up to Rs 1,50,000  in a financial year under Section 80C.

Saving tax through Children Education allowance

Children tuition Fee, Education, and hostel allowance:

Under section 10 (14) of the I-T Act, any Allowance such as Children Education Allowance & Hostel Allowances towards the education of children and hostel expenditure allowed to an employee by an employer will be an exemption. The exemption limited to Rs 100 per month and Rs 300 per month for a maximum of two children. These deductions for the payments are applicable if the payments made only for the Institutes, Universities, Schools, Colleges of India. The children’s education allowance does not apply to Foreign Universities. It is applicable for both Salaried and non-salaried taxpayer employees, whereas tuition fee allowance is not applicable for making donations.

Children’s education allowance is different from Tuition fees. Children’s education allowance deduction is possible only if it forms part of the salary component and, the taxpayer has got expenses towards the education of his children. The deductible amount is considered as Rs 100 per child every month, up to two children. With tuition fees under section 80C, the deduction is permissible based on actual expense caught for the education of children for maximum up to Rs 1.5 lakh.

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