A taxpayer is required to buy the exact same financial year to declare tax benefitsTo encourage cost savings and financial investments by taxpayers, the government has provided different reductions under the Earnings Tax Act, 1961.
Among the most popular of them is Area 80C.
It covers various financial investments and expenses that individual taxpayers and Hindu Undivided Households (HUFs) can claim for reductions approximately Rs.
1.5 lakh in a fiscal year.
Companies, collaboration firms, LLPs can not obtain the advantage of this section.
To get reductions under this arrangement, an individual need to choose the old tax regime.
The new concessional tax program does not permit reductions under this section.Let's take a look at how Section 80C can benefit taxpayers.1.
By declaring reductions under 80C, a specific or an HUF can decrease their gross income by Rs 1.5 lakh in a financial year.
Those in the greatest tax slab of 30 percent can save as much as Rs 46,800 (inclusive of cess at 4 percent) by utilising this provision in full.2.
A taxpayer is required to invest in qualified investment instruments in the exact same fiscal year to claim the tax benefit.
The taxpayer can invest approximately Rs 1.5 lakh in any of the qualified investment instruments such as Workers' Provident Fund, Public Provident Fund, Equity-linked Cost savings Plan shared funds, Sukanya Samriddhi Savings Scheme, National Savings Certificate, five-year tax-saving fixed deposits with a bank, and/or post workplace, National Pension Scheme and Senior Savings Plan.3.
Each of these eligible investment schemes has its own financial investment limit, rate of return and tax treatment on its returns.
An individual can utilize numerous instruments to reach the upper investment limit.4.
The taxpayer can also declare reductions under Section 80C for expenditures on the life insurance coverage premiums, payment of principal of mortgage, children's school charges.5.
You can also declare a reduction for stamp duty/fee to transfer home to yourself.Both homeowner Indians and NRIs can claim tax deductions under this area.