Education allowance vs reimbursement

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kiran (Querist)
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02 July 2015 I am getting general facility allowance @4% along with salary.the above allowance reflect in Form16 as a reimbursement towards washing/transport/education allowance
The above is exempted in I.Tax. I want cert.from employer that I have not claim reimbursement of education expenses from office. But office denies that education allowance is given hence reimbursement of education expenses cert.can't give to you
Pl.clarify difference between education.allowance and reimbursement. Why allowance reflect as a reimbursement. Towards education allowance

kiran

kiran (Querist)
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02 July 2015 What is the difference between education allowance and reimbursement of education expenses. Is both are same? If I haven't claim reimbursement then why it reflects as reimbursement towards education allowance in form no 16

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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21 July 2024 Education allowance and reimbursement of education expenses are distinct concepts under income tax rules. Here’s a clarification of each:

1. **Education Allowance:**
- Education allowance is a specific allowance provided by an employer to an employee for meeting the education-related expenses of the employee’s children. This allowance is a part of the salary package and is provided irrespective of whether the employee actually incurs any expenses on education.
- Under the Income Tax Act, education allowance up to Rs. 100 per child per month (up to a maximum of two children) is exempt from tax. Any amount received above this limit is taxable as perquisite under the head 'Salary'.
- The allowance reflects in Form 16 as part of your salary income and is categorized under the head of allowances, typically labeled as "Education Allowance".

2. **Reimbursement of Education Expenses:**
- Reimbursement of education expenses, on the other hand, refers to the actual payment made by the employer to the employee for specific education-related expenses incurred by the employee. This reimbursement is usually supported by bills or receipts provided by the employee.
- Reimbursements are exempt from tax only if they are for specific expenses that are eligible for exemption under the Income Tax Act, such as tuition fees paid to a university, college, school, etc., within India.
- If the reimbursement exceeds the eligible exemption limit or is not for qualifying expenses, it may be taxable as perquisite under 'Salary'.

**Difference and Form 16 Reporting:**
- **Education Allowance:** This is a fixed allowance provided by the employer as part of the salary package. It is exempt up to a specified limit per child per month.
- **Reimbursement of Education Expenses:** This involves actual payment by the employer to the employee against specific bills or receipts for education-related expenses incurred by the employee.

In your case:
- The education allowance you receive is part of your salary and is reflected in Form 16 under the allowances section.
- If the Form 16 states "Reimbursement towards education allowance", it might be a misnomer. It should ideally state "Education Allowance" if it is indeed part of your salary package and not an actual reimbursement of specific education expenses.

**Certification from Employer:**
- If you have not claimed any reimbursement for education expenses from your employer, you can request a certificate from your employer clarifying that the allowance received is towards education allowance and not reimbursement of specific education expenses.
- The employer’s response that they cannot provide a reimbursement certificate because education allowance is provided may stem from confusion or miscommunication. You may clarify with your HR or payroll department about the nature of the allowance and seek a correct certificate accordingly.

It's advisable to discuss this matter with your employer’s HR or payroll department to clarify the labeling on Form 16 and obtain the correct certification if needed for tax purposes.

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