You can get specific tax benefits as per Section 80C through investments in several schemes like ELSS, PPF and insurance. However, there are a few other expenses which may help you get higher tax benefits under the Section 80C of the Income Tax Act. You can claim deductions up to a maximum of Rs. 1.5 lakh if you have any of these expenditures to account for.
- Children’s tuition fees- The tuition fees paid for your kids can be claimed as a tax deduction from your gross annual income, thereby lowering your tax outgo. Tuition fees paid while taking admission or anytime thereafter for any school, university, college or other educational institution will be eligible for this deduction. However, this can only be claimed for full time studies pursued by children, including pre-nursery, play school and nursery classes. However, donations or development fees are not included in this category. The institution has to be located in the country and the limit is two children for every parent. The parent who is making this payment will be eligible for getting the tax benefit.
- Principal/Interest Repayment of Home Loan- If you have a home loan, you can save a major amount as tax deductions by showing the repayment of principal on your home loan. The EMI paid has two parts, namely interest and principal. The total principal can be claimed as a tax deduction from the gross annual income up to a maximum of Rs. 1.5 lakhs. You can get your loan certificate easily and this will show the EMI repaid annually along with the interest and principal repayments respectively. In the initial years after taking the loan, the principal component will be lower than the interest portion but this will rise in the future. Interest repayments will also be eligible for tax deductions under Section 24 up to a maximum of Rs. 2 lakhs. This is available only in case of construction/purchase of the home. The property should not be sold off within 5 years from the conclusion of the financial year in which possession of the same is obtained.
- Specific Payments for buying/constructing residential property- There are other expenses that are paid while buying a home including registration fee, stamp duty and so on. These can be claimed as deductions in the financial year in which you pay for these charges. These can be claimed irrespective of whether a loan has been taken to buy the property or not.
- Payments made to development authorities, housing boards and other organizations- In case you have purchased a home under instalment financing schemes from DDA or other similar authorities and instalments are being paid to these authorities, amounts paid towards repaying the principal amount can be claimed as a tax deduction under Section 80C.