This year, many of you may be financially stretched due to job losses or pay cuts and, therefore, may not have surplus cash to make those tax-saving investments
31 March is the last date for making tax saving investments for financial year 20-21. Those who haven’t done their tax saving investments for the year may be planning to do it now as only a few days are left. However, this year, many of you may be financially stretched due to job losses or pay cuts and, therefore, may not have surplus cash to make those tax-saving investments. Also, it is never a good idea to borrow money to save taxes. Therefore, we are listing some of the expenses which, if you are incurring, can be claimed as expenses so that you don’t need to make any additional investment if you are able to exhaust your Section 80 C deduction after these expenses.
Tuition fees: Under Section 80C, you can claim a deduction of up to ₹1.5 lakh against tuition fees (excluding donations and development fees) for up to two children during the financial year.
The fees could be paid to any school, university, college or any other educational institution situated in India.
Remember that this deduction can’t be claimed against fees paid for coaching classes or hostel or mess expenses.
So, for example, if you are paying tuition fees of ₹60,000 for each of your two children, you can claim a deduction of ₹1,20,000 under Section 80C.
Repayment towards home loan principal: If you have availed of a home loan, then you are eligible to claim a deduction of up to ₹1.5 lakh under Section 80 C against the principal repaid during the financial year.
If you are making the claim, just remember that you can’t sell the property within five years of possession of the same.
If you sell the property, then the deduction claimed will be added back to the income in the year of the sale. You can also claim the stamp duty and registration charges under the ₹1.5 lakh limit.
“This year, if you have opted for EMI (equated monthly instalment) moratorium, the principal repaid will be less as you didn’t pay any EMI during this period. Therefore, one needs to remember that deduction can be claimed against the actual principal paid and not what was due at the beginning of the year,” said Prakash Hegde, a Bengaluru-based chartered accountant.
Life insurance premium paid: If you have paid a life insurance premium for self or spouse, you are eligible to claim a deduction of up to ₹1.5 lakh against the life insurance premium paid under Section 80C.
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