As per the current norms of the Income Tax Act, tax payers spending on education of their children get exemption on paying income tax. However, the tax exemption, given under Section 80C and 80E of the Act, can only be availed if children's annual tuition fee is added to the Rs 1.50 lakh tax exemption limit.
Only full-time courses are covered under the exemption in the name of education where fee is given to an established university, college, school or any educational institute. The tuition fee paid to pre-nursery, play school and nursery schools is also covered under the tax exemption.
However, apart from the exemption in tuition fee, a huge part of one's income is spent on paying children's hostel, mess, books and stationery, school dress, transportation, library charge, donation fees. As per the income tax norms, there's no provision of exemption in fees paid for private or home tuition, coaching institute, and part time course or correspondence education.
Also, there's no provision of the tax exemption for parents of children studying abroad. Despite all these expenses related to education, exemption is given on the tuition fee only. The tax exemption is given in case of children only, which means if you are paying tuition fee of your spouse, you will not exempted from paying on tax on that expense.
The centre government could take crucial decisions to make school education more effective in the upcoming Budget. There are chances that several expenses related to school education would be covered under the tax exemption, or the government may give full exemption on expenses related to the school education.