Income Tax

New Delhi: Many people are aware that investing in schemes such as PPF (Public Provident Fund), ELSS (Equity-linked saving schemes) or insurance helps them to save tax under section 80C of Income-tax India.

But there are some expenditures which are permitted under Section 80C of the Income-tax Act, 1961, which can help to save tax, too. It may be noted that if you have incurred the given below expenses in the financial year 2018-19, then you are eligible to claim a deduction for up to a maximum of Rs 1.5 lakh. However, if the expenditure incurred is Rs 1.5 lakh or above, then you need not make any investment in order to use the Section 80 tax saving limit. Given below are four such expenses-

1. Tuition fees- As per the Income-tax Act, any tuition fees paid wither paid at the time of admission or to any university, college, school or other educational institution is eligible for deduction. It may be noted that the fees paid for the studies pursued full time can be claimed as a deduction. It also includes fees paid for any school activity, pre-nursery and nursery classes. Along with these, if any payment is made as development fees, donation, payment of similar nature will be considered as tuition fees.

2. Home Loan repayment- Under Section 80C, a homebuyer can get relief from equated monthly installments (EMI). EMI has two components- principal and interest. The amount of principal can be claimed as a deduction from the gross total income under Section 80C before the net taxable income is calculated. Along with the individuals, Hindu Undivided Families (HUFs) can also claim a deduction.

For this, one can get a loan certificate either from the bank’s branch or from online. This certificate shows how much total EMI is paid in a particular year. One important thing to note here is that, during the initial years of loan repayment, the interest component of the EMI will be much more than the principal component. In the later years, however, the principal repayment component of the EMI becomes much larger. 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.

3. Payments for the purchase or construction of house property- As per the Income-tax Act, stamp duty, registration fee and other expenses which have been incurred for buying the house qualifies for the deduction from gross total income in the fiscal year in which these expenses have incurred. However, it may be noted that it does not matter whether an individual has taken a loan or not to acquire the property.

4. Payment to DDA for the purchase of house-  If the homebuyer has bought a house from a development authority such as the Delhi Development Authority (DDA) and is paying the installment to DDA then any amount paid towards principal repayment can also be claimed as deduction under Section 80C of the Income-tax India.