Section 80C Tax Benefit on Expenses: Finance Trading Times

Section 80C Tax Benefit on Expenses

Details about tax benefits and deductions which can be claimed under section 80C of Income tax
Continuing further from our previous part: Section 80C Tax Savings: Complete List of qualifying investments, here is the list of expenses which give you tax relief or tax deductions under section 80C. Section 80C

Children’s Education Expense:
If you are paying for the education for your own children, then you can claim tax benefit on tution fee paid to the school or education institute. You need to maintain the receipts for claiming the tax benefit under section 80C.

Stamp Duty and Registration Charges for a home:
If you have bought a home (on your own or home loan), then you can claim tax benefit under section 80C for the registration charges and Stamp Duty charges paid towards purchase of your home. To see more on Home Loan related Tax Benefits, please check Home Loan Tax Benefits and All Home Loan Articles

So, these 2 options add to the list of qualifying expenses and investment which can be claimed for tax relief under section 80C.
Please note that investments usually have a lock-in period where you get your money back, while expenses are those which you have to pay like school fee, registration charges, etc.

What are the problems or disadvantages of section 80C ?
Nothing in this world comes without problems.
the first problem with section 80C investments is that ALL COLLECTIVE SUM of tax benefits that can be claimed is Rs. 1 lakh ONLY.
So if you have your provident fund amount at 65,000, you buy a life insurance policy by paying a premium of 30,000 and invest in a pension plan Rs 40,000 and repay your home loan PRINCIPAL amount as 25,000. Total of all your investments comes to 1.6 Lakhs.
However, since there is a limit of ONLY 1 Lakh under all collective investments you make under section 80C, you can claim tax benefit of only 1 Lakh Rs. even though you are investing Rs. 1.5 lakhs under all qualifying section 80C investments.

The second problem goes clubbed with this 1 lakh limit - there is so much wide variety of options available under section 80C, that individuals soon see their limit of 1 lakh getting frozen.
Other problem is with the ignorance about these limits. People end up buying policy after policy and investment after investments. What they dont know is that because of all these multiple investment options clubbed into on single section 80C with a limit of 1 Lakh, their investments have goen way above the limit, but they can get benefit only upto Rs. 1 lakh.

So take your own call. Decide on your own and then make a calculated investment for maximum and optimum tax benefit.
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1 Comment: Post your Comments

shashi said...(on 23 March 2012 at 00:59 )  

Hi,
I have paid Stamp Duty and Registration Charges for a home in this financial year but the apartment is still under construction and i thus it is not possessed, can i claim tax rebate under 80C, or it can be done only after possesion.
one other thing if i miss to declear the Stamp Duty and Registration Charges for a home investment in current financial year can it be done in next financial year.

Wish you all happy and fruitful trading and investing activities with safety! = = = Post a Comment

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