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Education facility provided by employer to employee is treated as perquisite. Following are some key considerations from the point of view taxation.
- Amount spent by employer for providing free education facility & training of employee is not taxable.
- Fixed education allowance received from employer is exempted from tax to the extent of Rs. 100 per month for maximum of 2 children.
- Allowances paid for hostel is exempt to the extent of Rs. 300 per month for maximum 2 children.
- School fee paid directly by the employer for employee’s family member is fully taxable.
- Reimbursement of expenses paid for education of employee’s family member is taxable as perquisite.
- Education facility provided from the institution owned and maintain by the employer to employee and his family members will be taxable under the following conditions:
- Education provided to employees children:
- Educational expenses upto Rs. 1000 per month – per child is exempt from tax.
- If value exceeds Rs. 1000 per month – per child then chargeable tax amount will be calculated as follows:
|Cost of such education in similar Institution or |
Institution in nearby locality
|B.||Less: Exempt amount per child||Rs. 1,000
|C.||Less: Amount paid by or recovered from employee||Rs. XXXX
|D.||Taxable Amount||D= A-(B+C)
- Education facility provided to family members other than children will be taxable on the basis of cost of education in same institution or in institution in nearby locality. If any amount is paid by the employee, then this amount is deducted from the cost of education in same institution or in institution in nearby locality, the difference amount is taxable.
- Scholarships are tax free when the amount paid is received in a bank account maintained specifically for the purpose of a scholarship scheme. Scholarships paid by the employer are not taxable as perquisite.