People can save taxes by investing in many tax saving schemes such as Public Provident Fund (PPF), equity-linked tax saving schemes (ELSS), and systematic investment plans (SIPs). However, we can also save taxes under Section 80C of the Income Tax rule by making certain expenditures.
You can claim a tax deduction up to a maximum of Rs 1.5 lakh if you have made the following expenditures in the fiscal year 2018-19. If your expenses incurred is more than Rs 1.5 lakh, you need not to make any investment to fully use the Section 80C tax saving limit.
As per the Section 80C, any tuition fees paid whether at the time of admission or thereafter to any school, college, universities or other educational institutions, it is eligible for deduction from your gross taxable income.
The fees paid only for the full-time course can be claimed as a deduction and includes fees paid for play school, pre-nursery and nursery schools. However, any payments done as a donation to an institution or as development fees will not be included in the same.
The institutions have to be based in India and can either be a state-run or private one and the benefit is restricted to only two children. The tax benefit will be available to only the parent who has made the payment.
However, if the family has three children, the father can claim the tax benefit for one child’s tuition fees if he has made the payment and the mother can claim the tax benefit for the other two children if she has made the payment.
Home Loan Principal Repayment:
If you have availed a home loan and you are paying through equated monthly instalments (EMI), which includes the principal and interest, the total amount of principal paid by you in a financial year can be claimed as a deduction from gross total income under Section 80C before calculating the net taxable income. It is also applicable to Hindu Undivided Families (HUFs).
You can get a loan certificate from the lending bank or online which shows how much of the EMI paid in a year was the repayment of the principal amount borrowed.
Payment of interest on the loan can also be claimed as a deduction from gross total income under Section 24 and Section 80EE subject to certain conditions.
Payments For Purchase Or Construction Of Residential Properties:
Any charges incurred on stamp duty, registration fees and other expenses for the purpose of buying a house is eligible for deduction from gross total income in the financial year in which these payments were made. The tax deduction is independent of the loans taken by an individual.
Payment To Development Authority, Housing Board Or Other Authority For The Purchase Of House:
If you have bought a house under a scheme by any development authority in any state and are paying the instalments to the said authority, the amount paid towards the principal repayment can be claimed as deduction under Section 80C.