In the next financial year (2025-26), many taxpayers may opt for the new income tax regime instead of the old one. This shift is due to the announcement in the Union Budget on February 1, 2025.
Finance Minister Nirmala Sitharaman has made income up to Rs 12 lakh per annum tax-free in the new regime and introduced changes in tax slabs.
If you choose the new regime, you will need to adjust your tax planning accordingly.
Deduction Available in the Old Income Tax Regime
Tax-saving options are more significant in the old tax regime, as deductions apply to various investments. Taxpayers who wish to benefit from these deductions must remain in the old regime.
Under Section 80C of the Income Tax Act, 1961, individuals can claim deductions of up to Rs 1.5 lakh annually, including school-college tuition fees for up to two children.
Deduction Only on School or College Tuition Fees
If your children attend school or college, you can claim a deduction on their tuition fees for up to two children, with a limit of Rs 1.5 lakh.
This deduction does not require extra effort, as most parents already pay tuition fees. Tax experts recommend that all eligible parents claim this benefit, as it involves minimal formalities.
Deduction Also Applies to Play School Fees
Parents can also claim deductions for tuition fees paid for playschool, crèche, or nursery. However, only tuition fees qualify for this deduction.
Other expenses, such as capitation fees, donations, or school bus charges, are not eligible.
How to Claim the Deduction?
To ensure you claim the deduction, obtain a certificate from the school or college detailing the total tuition fees paid in the financial year.
Many schools collect annual fees by January, so you can request the certificate after making the final payment. Employers often require employees to submit this certificate by mid-January.
If you are self-employed or run a business, you can claim the deduction while filing your income tax return for the financial year, reducing your tax liability significantly.
