Some salaried individuals would have already started their tax planning for the year. At this point, it is important to be informed about some lesser known provisions in Chapter VI-A of the I-T Act, 1961, under Section 80C. An individual in the highest tax bracket of 30% can save about R30,000 every year if he exhausts the full limit. Section 80C entitles an employee to certain deductions from the gross total income, up to a maximum limit of R1 lakh per year.
Yearly savings made in Public Provident Fund (PPF) subject to a maximum limit of Rs 1 lakh, premiums paid for life insurance, national savings certificates (NSCs), employee's contribution to provident fund (PF), tax-saving mutual funds, five-year fixed deposits in banks or post office, and pension plans all come under the purview of Section 80C. Moreover, tuition fees paid for two children will be deducted from your income under Section 80 C of the Act. The law states that the deduction will be on the actual payment of fee and not on books, bus fare etc.
Tuition fees include money paid whether at the time of admission or thereafter, to any university, college, school or other educational institution in India, for the purpose of full-time education of any two children of the salaried employee. Full-time education includes any educational course offered by a university, college, school or other institution to a student who is enrolled in a full-time course. Money paid as ‘development fees’ or donation or capitation fees or payment of similar nature will not be eligible for deduction. The law clearly mentions that full-time education includes play-school activities, pre-nursery and nursery classes. Salaried employees, however, cannot claim tax exemption under tuition fees if their child is studying abroad.
Under 80C, taxpayers can claim deduction on the amount paid as stamp duty when they buy a house. In fact, many taxpayers are not aware of this provision — the law clearly underlines that the amount paid towards stamp duty, registration fees and other expenses for the purpose of transfer of house property to the owner also qualifies for exemption. This is over and above the principal payment that qualifies under 80C. But one should note that the deduction under 80C for total amount, including principal loan repayment, stamp duty and registration charges, cannot exceed R1 lakh.
Inclusion of registration and stamp duty fees