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Before claiming Section 80C Income Tax deductions, be aware of these conditions

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You’ll be able to declare earnings tax deduction for the contributions made to your personal PPF account in addition to the PPF account of any variety of your youngster and your partner.

All of us avail tax advantages underneath Part 80C of the Revenue Tax Act, however just a few are conscious that these advantages include sure strings hooked up. Allow us to focus on these strings.

Dwelling mortgage compensation

Tax profit for compensation of the principal quantity of residence loans is eligible for deduction underneath Part 80C, however the deduction is on the market solely in respect of residence loans taken for buying a residential home property and that too from specified entities, together with banks and housing finance firms. In distinction, the deduction for curiosity underneath Part 24(b) is on the market for the cash borrowed from anybody, together with your pals and kin. The deduction for curiosity u/s 24(b) is on the market even for cash borrowed for restore, renovation of any property together with a industrial property.

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Furthermore, the tax profit availed underneath Part 80C will get reversed and the tax rebate availed in earlier years is added to your earnings in the event you switch the home inside 5 years from the tip of the monetary yr during which possession is taken. There isn’t a comparable provision for reversal of curiosity advantages for switch of your own home in a while. Likewise, there isn’t any provision for reversal of advantages in the event you prepay your private home mortgage inside 5 years.

Life Insurance coverage Premium

Deduction for all times insurance coverage premium is on the market on insurance coverage insurance policies taken by yourself life in addition to the lifetime of your partner and kids. There isn’t a restriction on the variety of kids for which you’ll be able to avail this profit. Furthermore, no situation is hooked up as regards monetary dependency of your kids for claiming this deduction. So, retired mother and father can optimize their tax outgo by paying the life insurance coverage premium of their incomes kids whose bucket of things obtainable underneath Part 80C will get overflown.

In distinction kids can’t declare tax advantages for cost of premium on life insurance coverage coverage taken on lifetime of their mother and father even when they’re financially dependent. An HUF may declare the tax advantages for the premium paid for the coverage on lifetime of any of its members.

Premium upto 10% of the sum assured is barely allowable and extra premium shouldn’t be eligible for tax rebate whereas in case of cash acquired again on life insurance coverage insurance policies from an insurance coverage firm in the course of the life time of insured will get taxed if the premium paid for the coverage exceeded 10% of the sum guarantee even for one yr in the course of the premium paying time period. So, although deduction upto 10% is on the market underneath Part 80C in case premium for any coverage is greater than 10% however exemption underneath Part 10(10d) will get misplaced if the premium exceeds 10% for any yr.

There may be provision for reversal of advantages loved earlier in the event you terminate or let your life insurance coverage coverage lapse earlier than completion of two years. In such a state of affairs deductions allowed in earlier years is added again within the yr during which the coverage lapses and no deduction is allowed for such premium in that yr.

PPF contributions

You’ll be able to declare earnings tax deduction for the contributions made to your personal PPF account in addition to the PPF account of any variety of your youngster and your partner. Although HUF can’t open a PPF account in its identify, however it could actually declare deduction for contribution made to the PPF account of any of its members. Since present to your youngster and partner is exempt underneath Part 56(2) and clubbing provisions should not have any affect as a result of curiosity on PPF is exempt, you need to use the PPF account to successfully reduce your tax outgo and switch your belongings to your partner. This can even assist your kids to construct a corpus for his or her future. Please observe as per the PPF scheme 2019, you cannot contribute greater than Rs 1.50 lakh to your PPF account and the PPF account of your minor kids taken collectively. Nonetheless, the restriction of Rs 1.50 lakh won’t apply for contributions made to the PPF account of your partner and main youngster.

The PPF account has an preliminary tenure of 15 years however this may be prolonged for a block of 5 years at a time for any variety of instances.

Schooling Bills

You’ll be able to declare deduction for the tutoring payment paid in your kids however just for two kids for full-time schooling in India. So, in case you have got greater than two kids, although the deduction in respect of different kids can’t be claimed by you however your partner can declare if he/she can also be a tax payer.

Deposits underneath Senior Citizen Scheme/Tax Saving Fastened Deposit

You’ll be able to declare tax advantages by depositing cash within the Senior Citizen Financial savings Scheme (SCSS). This account has a lock in interval of 5 years and turns into taxable if withdrawn earlier. Nonetheless, any cash acquired on closure of the account as a consequence of loss of life of the account holder even earlier than 5 years is absolutely exempt.

ELSS contributions

Investments within the Fairness Linked Financial savings Scheme (ELSS) are eligible for tax advantages underneath Part 80C. It’s the solely funding product which has the bottom holding interval requirement of three years. In case funding in ELSS is made by way of the Systematic Funding Plan (SIP), every instalment of SIP is handled as separate investments and the lock-in interval is computed accordingly. You get pleasure from an preliminary exemption of 1 lakh on earnings made on redemption of ELSS along with long-term capital positive factors made on any fairness product on which STT has been paid.

I’m positive, with this text you have got turn into conscious in regards to the varied circumstances hooked up with the Part 80C deduction.

(The author is a tax and funding knowledgeable, and will be reached at

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