ITR Filing Update: Taxpayers must do the calculations related to their income, investments and savings before filing ITR. 80C is the most popular and preferred section of the Income Tax Act for taxpayers to save tax.
Under Section 80C of Income Tax, taxpayers get the benefit of tax exemption on some of their expenses and investments. If you plan your investments well, you can claim a rebate of up to Rs 1.5 lakh per annum. In such a situation, while making a claim under it, taxpayers should avoid five mistakes.
Keep in mind the lock-in period
Certain deductions under Section 80C of Income Tax are covered under the lock-in period. FDs have a lock-in period of 5 years and Equity Linked Savings Schemes have a lock-in period of 3 years. If the taxpayer violates the rules of the lock-in period, the income is taxed as income of the taxpayer for that financial year.
Be sure to calculate tuition or school fees
If a taxpayer claims deduction for school or tuition fees, he/she has to first understand certain provisions. Taxpayer can claim fees paid for full time education of maximum two children. Only the tuition fee portion of the entire fee can be claimed. Therefore, the fee expense should be calculated before making a claim.
Avoid Investing Too Much in Endowment Plans
Endowment plans are good for tax saving and investment. However, investing a large part of the earnings in it will not give good returns. Therefore, to save more, invest in such term plans, on which discounts are given.
home loan repayments
Income tax payers can claim repayment of any type of home loan under 80C, but it needs to be understood that the principal amount of personal loan (loan taken from friends-relatives) is not covered under 80C. For claim, it is necessary to take loan from bank, co-operative bank, national housing bank etc.
Claim on Registration Stamp Duty
Stamp duty, nomination fee and certain other expenses related to transfer of residential house property can be claimed under 80C. For commercial property, these expenses cannot be claimed under 80C.
Don’t spend money in a hurry
One should not invest in haste in the greed of saving tax. This increases the chances of taking wrong investment decisions. So invest wisely and don’t invest just to save tax.