Child education allowance tax benefit in ITR filing for FY 25-26: Know when you can claim it

As taxpayers are filing their income tax return (ITR) for the Financial Year 2025-26, they are finding various ways to save income tax. Child education allowance (CEA) is one of the ways through which they can save their tax. Salaried employees who get CEA as part of their salary structure from their employer can claim CEA exemption. The exemption is available under Section 10(14) of the Income-tax Act, 1961, read with Rule 2BB of the Income-tax Rules.

For the income earned in FY 2025-26, CEA is Rs 100/month per child for up to 2 children. However, the limit has been increased by 30 times for the FY 2026-27 as taxpayers will be able to get up to Rs 3,000/month per child for up to 2 children, or up to Rs 72,000 in a financial year.

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As a taxpayer, when can you claim CEA exemption? Can you claim it under both tax regimes- old or new? Can you claim it for education expenses incurred during your child’s college or professional course education or is it available only for school education expenses?

Who is eligible to claim the Child Education Allowance (CEA) tax exemption?

Chartered accountant Abhishek Soni, CEO & co-founder, Tax2Win, told ET Wealth Online salaried employees can get CEA exemption only when they receive the allowance from their employer as part of their salary.

“Simply spending money on your child's education does not make you eligible. If your employer does not pay this allowance, you cannot claim the exemption,” says Soni.

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Is the CEA tax exemption available under the old and new tax regimes both?

Chartered accountant Jigar Suba, founder, JC Suba & Associates, told ET Wealth Online that CEA exemption is available only under the Old Tax Regime. Those who selects the New Tax Regime while filing their ITR can’t claim it.

Who can’t claim CEA tax exemption in ITR?

Soni says self-employed professionals, freelancers, business owners, and consultants cannot claim this benefit.

You can also not claim more than the amount allowed under the rules.

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How much is the CEA exemption you can get if your employer pays a lower amount than the limit allowed?

Soni says if your employer pays a lower amount, your exemption will be limited to the amount you actually receive. If the employer pays more, the exemption is still capped at the maximum CEA exemption limit.

Suba says in case the employer pays a higher amount, only the maximum CEA exemption allowed qualifies for exemption and the balance remains taxable.

Can you claim CEA exemption expenses incurred on child education for nursery, KG, graduation, postgraduate and professional courses?

Neeraj Agarwala, senior partner, Nangia & Co LLP, says that income tax rule does not prescribe the level of education for claiming exemption.

Accordingly, any level of education covered under the employment policy will be eligible for exemption, including nursery, school, college, graduation, or postgraduate education, Agarwala reveals.

Maximum CEA exemption available for a taxpayer

Particulars	Amount (Up to FY 2025-26)	Amount (For FY 2026-27 and onwards)
Exemption per child	INR 100 per month (INR 1,200 per annum)	INR 3,000 per month (INR 36,000 per annum)
Maximum number of children, for which exemption is available	2	2
Maximum annual exemption	INR 2,400 per annum	INR 72,000 per annum
Applicable Tax Regime	Old Regime	Old Regime

(As per Jigar Suba)

Can both parents claim the child education allowance exemption for the same children?

Soni says if both parents are salaried employees and both receive CEA from their respective employers, each of them can claim the exemption. The limit of two children applies separately to each parent, Soni explains.