Every person wants to save on tax. So, some of people try to evade tax, which is wrong on behalf of a responsible citizen of a country. For saving tax the most common and best way is the use of section 80C of the income tax act,1962. Section 80C is the section which provides every individual with some deductions from the taxable income which helps every individual to save on tax. The maximum limit of section 80C is Rs.1,50,000. This much limit could help to save tax a lot as this may help some of the individuals to get in lower slab rate.
People generally take this deduction by investing in some of the prescribed deposits or securities. But there are many more ways to reach the maximum limit other than by investment. Section 80C does not encourage only investment but also offers tax benefits in other expenses also.
How to reach Rs.1,50,000 limit without investment?
School and College Tuition Fees
The deduction is allowed only for full-time courses in India. This deduction is only allowed for a maximum of 2 children. Payment made for part-time education, distance learning, private coaching and donations, late fees, and transport charges is not allowed as deductions.
Repayment of Home Loans
Repayment of loan taken for Purchase and construction of the residential property is allowed as a deduction. The deduction is allowed only for the principal amount. Repayment of loans taken for repair, maintenance, and reconstruction is not allowed as a deduction. The deduction is allowed only if such loan is taken from Central Government, bank, LIC or National Housing Bank. If the property is transferred before years then the deduction will not be allowed and the deduction allowed earlier is deemed to be the income of that financial year.
Expenses paid as Stamp Duty and Registration Charges can be taken as a deduction
Payment of life insurance premium
Many of us take Life Insurance Policy as an investment. But if we consider LIC term plans, it can not be considered as investment plans.
The policy must be taken in the taxpayer’s name or spouse’s or any child’s name (whether married/ unmarried or dependent/ independent, minor/ major). HUF can take policy in the name of its members.
More Information about LIFE Insurance Premium as Deduction – Check Here
Provident fund contribution by the employee
The provident fund contribution by employees accumulated over years could be the major constituent which itself could be more than Rs.1,50,000. 12% of basic pay + D.A. is deducted by the employer and deposited in Employee’s Provident Fund or Recognized Provident Fund.
Sum paid under non-commutable deferred annuity for an individual on the life of taxpayer, spouse or child is allowed under this section.
After all these expenditures you may be left with no overall limit of 80C but if it is there it will be too less.
That you can fill up with investment. The investments under section 80C are:
- PPF
- NSC
- Post office Fixed deposit
- Senior Citizen Saving Scheme
- ELSS
- Fixed Deposit Account notified by Central Government
- Mutual Funds
- Bonds of NABARD
- Sukanya Samriddhi Account Scheme
- Unit linked Insurance Plans (ULIP)
In this way one can reach Rs.1,50,000 under 80C with no investment.
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School and College Tuition Fees:
What are elements that can be allowed under this head?
Only the school tuition fees is allowed as deduction..