How to Reach Rs 1,50,000 under Section 80C with No Investments?

You must be aware that you can get income-tax deduction of Rs 1,50,000 under Section 80C. The question is how would you reach Rs 1,50,000 under Section 80C with no investments? Let’s examine that in detail here.

Lately, not a day passes without someone mentioning Section 80C and Rs.1,50,000, does it? You sit down with coworkers for lunch, and someone tells you that they just invested money in an ELSS in a last-minute attempt to save taxes. You get calls at least once a week from mutual fund agents telling you to make the most of the increased limit.

But before you get convinced that you must make investments to take advantage of the limit under Section 80C, just pause.

We’ll show you how to reach the Rs.1,50,000 limit without making any additional investments. Section 80C not only encourages investments in savings schemes but also offers tax relief on some of your expenses.

What Is Section 80 C?

Section 80 allows you to get tax deductions on your expenses and investments to help in tax savings while promoting your financial growth. Taxpayers can benefit from section 80C deductions up to the limit of Rs. 1,50,000 by investing in investments like Employee (or Voluntary)  Provident fund, National Saving Certificate (NSC), Life Insurance Premium, Equity Linked Saving Scheme and getting deductions of expenses like tution fee (2 children), Home loan principal payment and Stamp duty and registration cost of the house.

Who Are Eligible For Section 80C?

• Individuals: Individuals include both residents and non residents. Individuals include both salaried and self employed professionals like businesspersons, tax consultants, doctors.
• HUFs (Hindu Undivided Families): HUFs are regarded as separate assessable entities under Income Tax Act, 1961
• Senior Citizens and others: These individuals are aged 60 years and above.
   

How To Reach The Rs.1,50,000 Limit Without Investments?

Step 1: Check your Employee PF Contribution during the year. Your provident fund contribution accumulated over the current financial year itself might add up to a sizeable amount. This is covered under the Rs.1,50,000 limit.

Step 2: Did you buy a house? Expenses related to stamp duty and registration charges can be deducted under Section 80C.

Step 3: Are you paying off a home loan? Check your home loan interest certificate for EMI payment details. Your principal repayment for this year can be claimed as a deduction.

Step 4: Do you have children who go to school or college? Get their tuition fee receipts and add them (this also includes playschool and preschool).

Step 5: Are you making life insurance premium payments? Claim the premium payments too. The only condition is the premium must be less than 10% of the sum assured.

Step 6: Add it all up and reduce it from Rs.1.5 lakh, i.e.

Rs.1,50,000 – (Step 1 + Step 2 + Step 3 + Step 4 + Step 5) = Amount remaining under Section 80C

Step 7: You might find yourself with very little of the overall limit left, say Rs.15,000.

Step 8: You can think about investing your money in products that suit your risk profile.

Thus it is very important for you to check how much of your investment and expenditure is already covered in 80C. Further investment in 80C for tax saving purposes should be done after analysing the above, and only if the overall limit is not fully utilised one should go for further investment in 80C to reap the maximum benefit

What Are The Investments Eligible For Deduction Under 80C?

PPF, NSC, NPS, Tax saver FDs, Post Office Term Deposit, ELSS, ULIP, Senior Citizens Savings Scheme, Sukanya Samridhi Account.

Here is a complete guide to all the deductions allowed under Section 80C.

How Do I Claim Deduction u/s 80C

Deduction u/s 80C can be claimed by making an investment declaration with your employer in Form 12BB. If your employer provides access to the employee Self-Service Payroll portal then you can make your investment declaration specifying the investment you have done in there. Employee Contributions to PF are usually prefilled since the employer already has this information. For any other Investment, you will have to declare the same.