Here's where we step in with our experts, Relax With Tax.
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I am currently working and studying.
If I pay my tuition fees out my own earnings and do not take an educational loan, will I get any tax benefits?
- Naveen Mohan Rao Kumar
The tuition fees paid by you will not make you eligible for any tax benefits. You will not be able to claim any income tax deduction.
Section 80E
To avail of any benefits under section 80E, an individual must borrow money from certain financial institutions, banks or approved charitable institutions for the purpose of pursuing a full-time education course.
The repayment of the principal amount of this loan and payment of interest should happen from the taxable income of the individual.
If the above conditions are met, the individual is eligible for deduction of the entire interest payout made during that year.
Section 80C
Under Section 80C, you can avail of a deduction if the tuition fees are paid for the full-time education of children.
As you do not fall in either of the above categories, there would be no deduction available to you regarding payment of fees.
I will be getting married soon.
Will I be eligible to avail of tax rebate benefits on the life insurance premium and medical insurance premium to be paid on my wife's policies?
Can I include that amount along with the premium I pay for my policies under the newly formed Section 80C?
She will be not be working and hence has no income of her own.
- Vijay S Chachra
Let's start with the investments that fall under Section 80C.
- Provident Fund
- Public Provident Fund
- Life insurance premium
- Pension plans
- Equity Linked Saving Schemes of mutual funds
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Infrastructure bonds
- National Savings Certificate
Besides these investments, the payments towards the principal amount of your home loan are also eligible for an income deduction.
The limit under this section is Rs 100,000. This is irrespective of how much you are earn and under which tax bracket you fall.
All the above must be made from the current year's earnings and not past earnings. So, if you are paying tax for the financial year 2005'06, your investments must be made from earnings during this period.
As you can see, an individual is eligible for deduction under Section 80C for life insurance premium.
However, this premium must be paid on your life of the life of your spouse or child. The child could be dependent/ independent, minor/ major, male/ female, married/ unmarried.
However, if you have taken the policy before marriage, then husband-wife relationship would not exist at the time. Hence, the premium paid would be excluded from eligible payments defined under Section 80C and there would be no deduction available to you.
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