You must be briefed that there are many tax-saving resources accessible in approved schemes such as PPF, ELSS or insurance under section 80C of the Income-tax Act, 1961. But apart from this there are also some expenses that are allowed under section 80C which helps you to claim tax deductions. Thus, you are eligible to claim a deduction up to Rs 1.5 lakh in case you have incurred any of the expenditures specified below in the existing fiscal year. If the overall expenses is Rs 1.5 lakh or more, then you do not need to make any contribution to leverage section 80C to the fullest.
1. Any tuition fees paid to any university , college, academy or other institution at the time of enrollment or thereafter are liable for tax deduction from your overall income. Only fees charged for the full-time study which also includes events in the play school, nursery and pre-nursery classes can be claimed. Contributions such as donation or development fees will not fall under tuition fees. The organisation needs to be based in India, it can be either government or private.
For each parent, this option is limited to only two children, and will be applicable to the person who initiated the expenditure. If, a parent has three children, so one parent can claim exemption for the tuition fee incurred for one child, while the other person can do it for the other two children. Consider, any education related expenses for yourself or spouse will not be authorised.
2. Section 80C will provide comfort to you as a home loan holder. There are two factors of the EMI paid annually by you: principal and interest. All individuals and Hindu Undivided Families (HUFs) can claim the entire principal paid in a fiscal year as a deduction. A loan certificate can easily be accessible through your lender or downloading it from online. This includes all the specifics related to your home loan. Under some conditions interest payment can also be claimed as a deduction under section 24 and section 80EE but this is only available in case of purchase of a new house or renovation of an existing house but not on loans obtained for the purpose of repairing, modifying of the house, if the certificate of completion has been granted or if the house is rented or let out by the owner. The residential property should not be sold within 5 years from the end of the fiscal year in which ownership is acquired or the deduction claimed earlier in the year of sale will be relocated back to the income.
3. There are certain expenses that must be incurred apart from housing prices. Stamp duty, processing fee and other costs incurred for the purchasing of a house are liable for the overall taxable income deduction in the fiscal year in which these expenditures are paid. Remember that this is irrespective of whether an individual has borrowed a loan to purchase the home or not and also keep in mind that contributions paid to become a part of a cooperative society are not accepted as deduction.
4. If you purchased a property from a development corporation such as the Delhi Development Authority (DDA) on an installment basis, then any sum paid in consideration of the principal repayment can also be claimed as tax deduction under the Section 80C of the Income Tax Act.