Understanding Income Tax Treatment of Childs Tuition Fee Payments and Section 80C Deductions

Hi,

I paid my son's school fees (1st installment - Rs 42,400) on March 28th, 2016, for the year 2016-17 after the circular from the school was issued. When I submitted the challan as investment proof in my organization, the 1st installment was rejected, and only the 2nd installment, which was paid in September 2016, was accepted. The reason given was that only expenses on and after April 1st, 2016, are accepted.

What I fail to understand is that the payment was made for the academic year 2016-17 starting in April, and I had to pre-pay it considering holidays and online payment issues.

Kindly help.

Thanks,
Sandip Das

80C claims are on an actual payment basis, not based on advance/arrear period payment or accrual basis. It takes effect on the date of payment basis.

Hi Sandip,

Although you have made the payment for the year 2016-17, the investment (fees) was done before 1st April, and many companies will not consider that for the investment proof.

Dear Sandip,

Your employer has rejected your first installment as it was related to AY 2016-17, hence subject to revision of TDS return. Anyway, since you paid towards the child's fees, it is permitted as a deduction under section 80C. Therefore, you can consider this installment in your income tax return. I presume you have already filed your income tax return because the due date was 07/08/2016 for AY 2016-17. However, still, if you have not claimed the deduction of the first installment and the return has already been filed, revise the return if it was not a belated return and the assessment has not been done by the income tax department. In case you have filed the belated return and the assessment has also been done, you can file rectification under section 154 of the Income Tax Act, 1961. As per the CBDT instructions No. 01/2016 dated 15/2/2016, within the period of six months, the income tax department has to issue the rectification order under section 154(8) of the act, considering the last date of the month wherein the taxpayer has made the application for rectification. If no rectification order is issued by the Income Tax within the six months, the rectification application shall be deemed to lapse or reject the claim. The period to file the application for rectification is four years from the end of the relevant AY, i.e., for AY 2016-17, the assessee can file rectification up to 31/03/2021.

Thanks & Regards,

V SHAKYA

HR & Labour Laws Advisor