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Tax effects: Fees paid to foreign educational institutions


Studying abroad has become normal due to globalization and taxpayers should beware that any fees paid to foreign universities, colleges or schools are eligible for a deduction from taxable income. Questions about this come to the income tax practitioners while filing the income tax returns.

Section 80C of the Income Tax Act, 1961 deals with the above particulars.

As per section 80C of the Income Tax Act,1961, while computing the taxable income of an individual and HUF, any sum paid towards the education of the child (up to 2 children) to the university, college or school as tuition fees are allowed as a deduction from the taxable income up to Rs.1,50,000/-.

The above eligible amount specifically excludes payment of developmental fees or payment of donations or of such kind.

Further, the fees payment must be for a full-time course of study.

So at a glance, any fees paid as tuition fees, to foreign universities, colleges, and schools also become eligible for it up to Rs.1,50,000/-

Further, while interpreting the subsections to section 80C, subsection (xvii)(a) which specifically provides that the payment of tuition fees to the universities, colleges, school or other educational institutions which are situated in India. Which means that the location of the institution is a deciding factor for the allowance of the above benefit.

If an educational institution is affiliated with a foreign institution and located in India, then it is eligible for the deduction, but if it is located outside India, it will be disallowed straightforward.

The above interpretation is my opinion on the section. For more information, please visit https://www.incometaxindia.gov.in/Pages/acts/income-tax-act.aspx


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