Save taxes by payment of tuition fees

aerial By aerial, 5th Mar 2012 | Follow this author | RSS Feed | Short URL http://nut.bz/ertbe871/
Posted in Wikinut>Money>Tax

This article provides you useful tips to save your taxes. Many of you may be paying tuition fees for education of your children. But little, did you know you can save taxes by payment of such fees. This article will explain you how to save taxes by payment of tuition fees. Read on ...

Tax planning avenues

Every individual is required to pay taxes on income. Thus, tax is tax is calculated on your income. Generally, taxes are calculated in accordance with the provisions of the domestic tax laws. Similarly, income is also calculated in accordance with the provisions of the domestic tax laws.

There are various incentives available under the tax laws. Such incentives provides for reduction in your income. One of such incentives available to an individual is tax deduction.

An individual can save taxes by availing various tax deductions available under the domestic tax laws. Tax deduction would result in a reduction in your income. Hence, a lot of taxes can be saved by availing such tax deduction.

Knowledge of tax law is very essential. This would enable an individual to carry out legitimate tax planning.

How to save taxes?

Under the Indian tax laws, an individual is allowed a tax deduction for payment of tuition fees. The tuition fees should pertain to education of the children. Tax deduction is available subject to the conditions, limitations and restrictions provided under the Indian domestic tax laws.

Tuition fees paid for children at the time of admission or even thereafter are eligible for tax deduction. However, tax deduction is available only if the tuition fees are paid to any university, college, school or other educational institution. Such university, college school or other educational institution must be situated in India.

Individual would be allowed a tax deduction only if the tuition fees pertain to full-time education of his/ her children.

Restrictions and exclusions

Tax deduction for payment of tuition fees is available only for 2 children. Thus, if an individual has 3 children, the tax deduction would be restricted up to payment of tuition fees for 2 children. Tax deduction is restricted to an amount of ₹ 100,000/-. Payment in nature of development fees or donation is not eligible for tax deduction under the Indian tax laws.

Documentation

The individual should request the educational institution for a receipt of payment of tuition fees. This receipt should be preserved by the individual to defend future tax litigation.

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