Tax Treatment of aforesaid allowances: Minimum of the following shall be exempted: a) Actual amount received; or b) Actual expenditure incurred for such purpose. s12 Allowances, deduction from which do not depend on actual expenditure [Sec. 10(14)(ii)] Children Education Allowance An allowance to meet the expenses in connection with education of children, by whatever name called Treatment: Minimum of the following is exempted from tax- a) 100 per month per child (to the maximum of two children) b) Actual amount received for each child to the maximum of two children) Children Hostel Allowance An allowance to meet the hostel expenses of children, by whatever name called. Treatment: Minimum of the following is exempted from tax- a) 300 per month per child to the maximum of two children) b) Actual amount received for each child (to the maximum of two children) Notes for Children Education Allowance and Hostel Allowance: a) Child includes adopted child, step-child but does not include illegitimate child and grandchild. b) Child may be major or minor child. c) Deduction is available irrespective of actual expenditure incurred on education of child. ILLUSTRATION Mr. Laloo Singh, received education allowance of 80 p.m. for his Ist child, 90 p.m. for his 2nd child and 120p.m. for his 3rd child. He also received hostel allowance of 1,000 p.m. None of his children are studying. Find taxable Children Education Allowance and Hostel allowance