Education
plays an important role in sustainable economic development of a nation.
Under
Income Tax Act certain incentives are available for promotion of education like
children education allowance, repayment of loan for higher education, tuition
fee of children etc. Table 2.1 shows changes carried on by the Government with
reference to these incentives during the study period.
INCOME
TAX INCENTIVES FOR EDUCATION ..
Name
of incentive
|
Income
Tax Section
|
Highest
limit
|
Period
|
Exemption
of children education allowance paid by employer to employee
|
10(14)
|
Rs.
1,200 p.a. per child (maximum for 2children)
|
From
A.Y. 1997-98
|
Repayment
of loan taken from any financial institution for higher education (it can be
availed even for higher study of spouse and children from A.Y. 2006-07)
|
80E
|
1)
Rs. 25,000 p.a. for maximum 8 years
2)
Rs. 40,000 p.a. for maximum 8 years
3)
Full amount of interest only
|
1)
A.Y. 1996-97 to A.Y. 2000-01
2)
A.Y. 2001-02 to A.Y. 2005-06
3)
From A.Y. 2006-07
|
Tuition
fee of children (maximum for 2 children)
|
80C
|
1)
Rs.12,000 p.a. per child
2)
Subject to ceiling of Rs. 1,00,000 under Sec.80 C
|
1)
From A.Y. 2004-05
2)
From A.Y. 2006-07
|
Repayment
of loan taken from any financial institution for higher education (it can be
availed even for higher study of spouse and children
|
80E
|
Full
amount of interest only
|
From
A.Y. 2006-07
|
Tuition
fee of children (maximum for 2 children)
|
80C
|
Subject
to ceiling of Rs. 1,50,000 under
Section
80 C
|
From
A.Y. 2015-16
|
The
above Table reveals that Union Government has tried to achieve social objective
of education to masses through the above mentioned provisions.
However,
exemption limit for children education allowance is very meager and has not
been revised since A.Y. 1997-98 despite the fact that cost of study has increased
many times. Further, it can also be observed that principal amount under Sec.
80E has been disallowed since A.Y. 2006-07.
Moreover,
only tuition fee is deductible under Sec. 80C which forms a small portion of
total charges by educational institutions.
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