Taxation is a
system which helps to generate revenue which later helps to meet public
expenditure. It is the responsibility of every citizen to filling tax return.
But there are some cases where a person can avail tax rebate. The Income Tax
Act provides the assesses provision for deduction and rebates on tax liability.
As per the
act, Taxpayers get a refund on their income tax if they are paying tax more
than they owe. The refund of the tax money comes at the end of the fiscal year.
In India, a citizen can avail a refund of the extra tax with interest. But to
avail the rebate, one needs to file his/her ITR within a particular period. The
tax slab under this tax rebate changed every year as per the government’s
direction.
Section 80C tax rebate of the Income Tax Act is a very important section for
the taxpayers. Under this section you can reduce taxable income, that means you
can save on taxes during filling taxation.
What is the deduction under section 80C?
You can get a
tax rebate under section 80C of the Income Tax Act, 1961. This section
consists some of investments and expenses for which you don’t need to pay any
tax. Under this section, any taxpayer can avail a maximum tax deduction of Rs
1.5 lakh for a financial year. But you need to od investment which is covered
by the section 80C of the Income Tax Act. As per the act, an individual or a
Hindu Undivided Family (HUF) is eligible to avail tax reduction under section
80C tax rebate.
Four expenditures that can help you save tax
1. Tuition fee for full-time education of your children
As per the section
80C tax rebate, a
person can claim for a tax deduction on the payment made by him/her for the
tuition fees of children. The act says, any tuition fees paid at the time of
admission or to any school, colleges and universities, come under this
deduction. But, fees paid by you must be for the full-time study of your
children. This section also covers fees paid for play school, pre-nursery and
nursery classes. You can claim for tax
deduction up to Rs. 1.5 lakh.
This tax
rebate under section 80C can help you save money as you don’t require to
pay tax for this. The act says any kind of payment like development fees or
donation and other payment with similar nature will be not considered as
tuition fees.
There are
certain terms and condition that you must have to follow to avail this benefit.
The educational institutes should be in India, no matter whether it is a
private or government institute. Each parent can only avail this benefit for
two children. If one parent has three children, then the father can avail this
for one child for the payment made by him. For other two children, the mother
can claim for the deduction, but she must be a working lady.
2. Repayment of home loan by EMI
If you have
purchased a home loan, then section 80C tax rebate brings a major relief. Under this
section, the repayment of the original amount or principal amount that you have
taken for construct a house is entitled to tax deduction. By this, you will get
relief while paying hefty equated monthly installments (EMI). EMI comes with
two major components, i.e., Principle and Interest. So, you can avail for a tax
deduction for the principle. This type of deduction can be claimed by
individual and also by Hindu Undivided Families. This also comes with certain
terms and conditions. You can only claim for the tax deduction if you have
taken the money for purchase or construction of the house. Loan taken for the
repair, alteration of the houses will now come under this.
3. Payment made for Public Provident Fund (PPF)
You can avail
tax rebate under section 80C for the payment to PPF account under the
name of yours, wife or children. Previously, the tax deduction limit was Rs.
70,00 but after 2011, the limit has been increased to Rs. 1 lakh every year.
PPF account can be opened by any salaried and non-salaried person.
4. Any payment made to development authority and housing board authority
Another tax
rebate under section 80C is the amount paid toward the principle from
development authority. For example, if you have purchased a house under an
installment scheme from Delhi Development Authority and now you are paying the
installments to the development authority for the principal repayment then you
can claim for a tax deduction.
Not only you will get a tax rebate under
section 80C, but there are also many sections in the Income Tax Act, 1961
under which you can avail the tax deduction benefits. For example, this includes
U/s 88B: Rebate to senior Citizen, U/s 88C: Rebate for Women Assesses, Section
80DD and more. So, check those Acts properly to get the benefits and save tax.
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