How To Pay Less Tax? A Guideline To Filing Claims Under Section 80C

Section 80C of the Income Tax Act is intended to help promote savings and investments amongst taxpayers and assist them in lowering their tax liabilities

An individual or HUF (Hindu Undivided Family) is eligible to claim deductions in this section. The maximum amount allowed for deductions under Section 80C is Rs 1.5 lakh per annum.

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With the upcoming tax deadlines, taxpayers must assess their liabilities and file their returns to ensure they don’t have to face any penalties for not adhering to the timeline. However, it is also important to ensure that you file your deductions correctly to save as much as you can on the taxes. 

One such game changer provided in the Income Tax Act is Section 80C. This particular section under the act is intended to help promote savings and investments amongst taxpayers and assist them in lowering their tax liabilities. As typical as it sounds, Section 80C is fairly simple to understand. So let’s dive into how it works and what it offers for the taxpayers.

Section 80C

This section provides a huge variety of investment avenues where you can invest your money and claim deductions on your taxable income. An individual or HUF (Hindu Undivided Family) is eligible to claim deductions in this section. The maximum amount allowed for deductions under Section 80C is Rs 1.5 lakh per annum.

Deductions

For the deductions, several investment avenues are available for the taxpayer to select from. Some popular ones are National Saving Certificates (NSC), Unit Linked Insurance Plans (ULIPs) including a minimum lock-in period of 5 years, Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), life insurance policies (for yourself, your offsprings or your spouse), and certain fixed deposits (with a 5-year minimum period), among others. 

Further, principal repayment of your home loan, tuition fees for your children, along with the stamp duty and registration fee paid during purchasing a home or property can also be claimed as tax deduction under Section 80C of the I-T Act. 

Advantages

• Tax Benefit - The major advantage of using Section 80C is that it allows you to reduce your taxable income, in turn, lowering the amount of taxes you are obliged to pay to the government.
• Discipline - In addition to helping you save on tax, investment options under the section make you commit for a longer time. This helps develop financial discipline and promotes the habit of saving amongst individuals.
• Security - Investment avenues like PPF and pension schemes included in the ambit of Section 80C not only help inculcate a culture of saving but also enhance the financial security of taxpayers. It helps build a stable wealth pool for retirement years or emergencies. 

By opting for investments under the section, you can help build a secure future for yourself. However, you must maintain a proper record of documentation with all the investment proofs and receipts at all times. Also, ensure that you do your due diligence before investing in any of the avenues to claim deductions and file your deductions on time. Deductions can only be claimed for the fiscal year in which the investment was made or the expense was incurred. Therefore, ensure that you don’t miss out on the tax relaxation by failing to submit your claims on time. Finally, always keep updating your financial strategy to align with your life goals and be updated about the schemes available to your benefit.