Eligible individuals can claim a tuition fee deduction subject to income, payment and statutory limits under the Income Tax Ordinance, 2001.
ISLAMABAD: The Income Tax Ordinance, 2001, updated up to June 30, 2026, allows eligible individuals to claim a deductible allowance for tuition fees paid during Tax Year 2027, subject to prescribed conditions and limits.
According to the Federal Board of Revenue (FBR), the education expense allowance is available to individuals whose taxable income is less than Rs1.5 million.
Education expenses deduction under Section 60
Under Section 60 of the Income Tax Ordinance, an eligible individual can claim a deductible allowance for tuition fees paid during a tax year, provided the individual’s taxable income is below Rs1.5 million.
However, the amount that can be claimed is restricted to the lowest of three prescribed limits.
The education expense allowance cannot exceed:
• 5% of the total tuition fees paid by the individual during the tax year;
• 25% of the individual’s taxable income for the year; or
• Rs60,000 multiplied by the number of children of the individual.
The taxpayer can therefore claim only the amount that falls within the lowest applicable limit.
Unused education allowance cannot be carried forward
The law also states that any education expense allowance, or part of an allowance, that cannot be deducted in the relevant tax year cannot be carried forward to a subsequent tax year.
Consequently, taxpayers cannot use any unused portion of the eligible education allowance to reduce their tax liability in a later year.
Either parent can claim tuition fee allowance
The education expense allowance may be claimed against the tax liability of either parent who makes the tuition fee payment.
For claiming the allowance, the taxpayer must provide either the National Tax Number (NTN) or the name of the educational institution.
This enables the eligible parent who has paid the tuition fees to claim the applicable allowance, provided all other conditions and statutory limits are met.
Education allowance excluded from Section 149 calculation
The Income Tax Ordinance also provides that the education expense allowance is not taken into account when calculating tax deduction under Section 149.
Section 149 deals with the deduction of tax from salary. The exclusion means the education expense allowance is treated separately from the salary tax deduction calculation under the provision.
Education tax relief available for Tax Year 2027
The provisions provide a mechanism for eligible taxpayers to obtain tax relief on qualifying tuition fees during Tax Year 2027.
Individuals seeking to claim the allowance should ensure that they meet the Rs1.5 million taxable-income threshold, comply with the prescribed calculation limits and retain the required details of the educational institution or its NTN.