The issue of Drawing and Disbursing Officers (DDOs) not allowing employees to claim deductions for the full-time education of their children under section 80C has been a common problem. DDO's only allow deductions for fees that are labeled as "Tuition fees" on receipts issued by educational institutions.
However, fees such as admission fees, computer fees, science class fees, practical fees, exam fees, etc. are not being allowed as deductions. Even when employees raise queries to their DDO's, they are not being properly addressed.
To resolve this issue, it is important to understand the relevant provision of section 80C, specifically clause (xvii) and clause (4)(C). Clause (xvii) states that any sums paid or deposited in the previous year by the assessee for tuition fees (excluding any payment towards development fees, donation or similar nature) to any university, college, school or other educational institution situated within India for the purpose of full-time education of any of the persons specified in sub-section (4) can be claimed as a deduction.
Clause (4)(C) states that in the case of an individual, any two children of such individual are eligible for the deduction. Schools and colleges generally charge various types of fees from students, including admission fees, practical fees, exam fees, computer class fees, building fund, and tuition fees. However, the term "Tuition fees" used in schools and colleges has a different meaning than the term used in section 80C, which has a broader meaning and includes all types of fees payments made to schools and colleges, except for development fees and donations.
The Central Board of Direct Taxes (CBDT) has also clarified this issue through circular 1/2017 dated 02.01.2017 (How to Calculate TDS on salary Income), which states that "tuition fees shall include any payment of fees" "except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature." It also clarified that full-time education includes play-school activities, pre-nursery and nursery classes.
Therefore, employees should ask their DDO's to allow deductions for all types of fees under section 80C, including admission fees, exam fees, comp
