Tax, 
Employee, 
Children Education Allowance, 
Tax Exemption
Tax, Employee, Children Education Allowance, Tax Exemption

Tax Exemption For Employees In Receipt Of Children's Education/Hostel Allowance

This exemption is available if the allowance is actually spent. The threshold limit for being eligible for rebate under Section 87A is Rs. 5 lakhs. As the aggregate medical expenses exceed one lakh, you can divide these expenses and both can claim it under Section 80D.
Q

Whether exemption of Rs 100 per month per child for education expenses and Rs. 300 per child for hostel expenses, up to two children is available only for salaried classes or for all individuals? Can both husband and wife claim this in their respective ITR for two children?  

A

Section 10(14) read with rule 2BB provides for exemption to an employee for certain allowances. It provides for an exemption for an employee in receipt of children's education/hostel allowance received as a part of salary for a maximum of two children. The exemption is up to Rs. 100/- per child for education allowance and up to Rs. 300/- for each child. Since this exemption is available for allowance received from the employer, non-salaried cannot claim this exemption. This exemption is available if the allowance is actually spent. So the employee with no children or whose children are no longer studying cannot claim this exemption even if the employer has these allowances as part of the salary. Please note that this exemption is not available if you opt for a new tax regime.

Yes, both the husband and the wife can claim this exemption for the same child. 

I am a senior citizen aged 65 years. My total taxable income after various deductions like Section 80C, 80D and 80TTB is as follows: 

Taxable Income other than capital gains   Rs. 4,80,000/-, 

Long-term capital loss on listed shares Rs. -27000/-,

Short-term capital gains on listed shares Rs. 1,30,000/-. Am I entitled to claim relief under Sec 87A?  

Since your income is after various deductions it seems you intend to opt for the old tax regime. The threshold limit for being eligible for rebate under Section 87A is Rs. 5 lakhs. As per the income tax provisions, you cannot set off long-term capital loss against short-term capital gains during the year. However, you can carry forward these long-term losses to set off against long-term capital gains in eight subsequent years. So your total taxable income for the year would be Rs. 6,10,000/- and since it is above the threshold of Rs. 5 lakhs for availing rebate under Section 87A, you will not be able to claim this rebate under Section 87A if you opt for old tax regime. However, if you opt for a new tax regime, you will be able to avail rebate under section 87A as the threshold for an 87A rebate under the new tax regime is Rs. 7 lakhs. 

Q

I and my wife both are senior citizens and are diabetic. We spend more than one lakh rupees in a year on medicine, doctor consultations and pathological tests. We do not have any health insurance policy. Can we claim any deduction for the medical expenses incurred in FY 2023-24? If yes, what is the quantum of relief and under which section? 

A

A deduction under Section 80 D is available to senior citizens up to Rs. 50,000/- in a year in respect of medical insurance premiums including Rs. 5,000/- for preventive health check-ups. In case the senior citizen does not have a health policy, he can claim a deduction under Section 80D up to Rs. 50,000/- in a year for regular medical expenses incurred like hospitalisation, medicine, and pathological test costs doctors consultation charges etc. Please note both of you can claim this deduction up to Rs. 50,000/- separately in your individual income tax returns. As the aggregate medical expenses exceed one lakhs, you can divide these expenses and both can claim it under Section 80D. Please note that the payment of these expenses has to be made otherwise than in cash to be eligible to claim such deduction under Section 80D. Within the overall limit of Rs. 50,000/- you can claim up to Rs. 5,000/- in respect of preventive health check-ups which can be paid in cash as well.

The author is a tax and investment expert

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)

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