Income Tax: Section 80C to help you lower your taxable income
Income Tax Return (ITR) filing deadline is just two weeks away. With less days in hand, you can still reduce your taxable income.
Legally, the government allows for certain tax-saving deductions that you can use to lower your taxable income. You can effectively use these deductions to pay less tax.
Under section 80C, a deduction of Rs 1,50,000 can be claimed from your total income. In simple terms, you can reduce up to Rs 1,50,000 from your total taxable income through section 80C. This deduction is allowed to an Individual or an HUF.
A maximum of Rs 1, 50,000 can be claimed for the financial year 2016-17. The limit for the financial year 2017-18 is also Rs 1, 50,000. If you have paid excess taxes, but have invested in LIC, PPF, Mediclaim etc., you can file your Income Tax Return and get a refund.
You can invest in the following schemes up to Rs 1.5 lakhs to avail the deduction of sec 80C from your total income:
- Equity linked saving scheme(ELSS)
- Public provident fund
- 5-yeartax saving FD
- National Pension Scheme (NPS)
- National Savings Certificates (NSC)
- Unit Linked Insurance Plan (ULIP)
- Sukanya Samridhhi Yojana
- Senior citizen savings scheme
Archit Gupta, Founder and CEO ClearTax said, "Apart from the above investments, there are certain expenses if incurred by you during the FY 2016-17 will be counted in the limit of Rs 1.5 lakhs u/s 80C.It means that you need to invest only balance amount remaining after claiming such expenses in above investments."
Such expenses are:
Children’s tuition fees
The tuition fee paid for the education of two children is eligible for tax deduction under Section 80C of up to Rs 1.5 lakh. The fee can be paid to any school, college, university or educational institute situated in India. The fees have to be for a full-time course only.
Repayment of home loan- Principal
The repayment of the principal of a loan taken to buy or construct a residential property is eligible for tax deductions under Section 80C.
Life insurance premium
The annual premium paid for life insurance in the name of the taxpayer or the taxpayer’s wife and children is an eligible tax-saving payment under Section 80C. The deduction is valid only if the premium is less than 10% of the sum assured.
Employees Provident Fund
An employee’s contribution to the Employee Provident Fund (EPF) account also earns a tax break under Section 80C of up to Rs 1.5 lakh.