Union Budget 2023: What Relief Can Parents Expect

Union Budget 2023: What Relief Can Parents Expect 

After the major recession in the global economy, all sectors especially the middle-class individual taxpayers eagerly waits for the budget to get announced. Any change in government policy will have a direct and major impact on the common man’s household budget. The rising cost of living and continuous drop in income has a significant impact on the budget of a middle-class family. And when you have a family and child to take care of, the pressure goes up. Our Finance minister Nirmala Sitharaman presented the Union Budget 2023-24, on Wednesday.  At the budget speech, Sitharaman stressed on digital education and skilling programs.

1. Section 80C of Income Tax on Education

As a parent, you might be curious to know some laws related to income tax and how you can take advantage of tax exemption on education expenses, your child’s tuition fees, health, and education loans. Let’s read more to understand more about additional deductions.  

Eligibility of Deduction

 A parent can claim a deduction of Rs 1.50 lakh under Section 80C of Income Tax for the expenses incurred on the education of two children. They can also take the exemption on the expenses incurred on (Full Time Education) as well as the tuition fees. Tax exemption can be availed on the interest paid on Education Loan under Income Tax (under Act 80 E). This exemption can be claimed to start from the year in which the loan repayment starts and can be availed for the next 7 years or before the loan repayment, whichever is earlier. Fees on development and transport and not eligible for deduction. 

You can get the benefit of fees paid for Nursery, play school and even the creches. 

However, the deduction can only be possible if the institution, college, or university must be situated in India, even if affiliated with a foreign university. The deduction is available for the full-time course only. An adopted child’s school fees are also eligible for deduction. 

Non - Eligibility of Deduction 

The deduction will not be made if the payment is made as a donation or charity. For part-time courses, payment made for siblings is not included. The deduction is not eligible for fees made to any university situated outside Indi
 

2.  Health insurance 

A deduction of up to Rs 25,000 can be taken under section 80D on paying the health insurance premiums for your children. Tax exemption is available under section 80C of the Income Tax Act on paying premiums for term life insurance plans. There is no need to take a new plan every year. Annual renewal premiums in a policy can also get tax exemption under section 80C.

Under section 80DDB, the income tax deduction is available on the amount spent for the treatment of serious and prolonged illness. The income taxpayer can claim a deduction for the amount spent on the treatment of his parents, children, dependent siblings, and wife.

This deduction for the child is 40 thousand rupees but the medical certificate is necessary for this.

While the middle-class family might see some benefits, the education sector will also see many positive changes. The Covid pandemic 2020 had a major impact on education due to the shutdown of many schools. Fiance Minister Nirmala Sitaraman also announced that a National Digital Library for children and adolescents would be established. The digital library will make accessibility easy for high-quality books across all languages and genres.  The government has also announced setting up a national digital university, operation will likely start in June-July this year.  The education budget for 2023 has risen by 8.27% to Rs 1,12,899.47 crore. The education budget crossed Rs 1 lakh crore for the first time last year. 

Hopefully, the new initiatives and schemes will benefit parents and their child’s education. Please comment down below with your valuable input and share your thoughts with us.