CAF-2 · Chapter 4 · Question 4 of 15
Mr. Ali, an individual with a taxable income of Rs. 1,400,000, paid tuition fees for his two children amounting to Rs. 400,000 during the tax year. What is the maximum deductible allowance for education expenses he can claim?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) C) Rs. 20,000
Explanation
The allowance cannot exceed the lesser of: (a) 5% of tuition fee (Rs. 20,000); (b) 25% of taxable income (Rs. 350,000); or (c) Rs. 60,000 x number of children (Rs. 120,000). The lesser amount is Rs. 20,000.
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