Under 80C, 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.
The last date for filing income tax returns for the financial year 2020-21 is approaching. The last date for filing returns for taxpayers is December 31, 2021. In such a situation, 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.
Actually, under 80C, 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.
Pay attention to the lockin period
Certain deductions under section 80C 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, then the income is taxed as the income of the taxpayer for that financial year.
Make 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. The taxpayer can claim the fees paid for full time education for a maximum of two children. Only the tuition fee portion of the complete fee can be claimed. Therefore, the fee expense must 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 yield good returns. Therefore, to save more, invest in term plans, which are discounted.
Home loan repayment
But exemption… Taxpayers can claim repayment of any kind 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, cooperative bank, national housing bank, etc.
Claim on registration stamp duty
Stamp duty, enrollment fee and certain other expenses directly related to transfer of residential house property can be claimed under 80C. For commercial property, these expenses cannot be claimed under 80C.
Don’t invest money in a hurry
One should not invest in haste in the greed of saving tax. This increases the chances of making the wrong investment decision. So invest wisely and never invest just to save tax.