income tax deduction under section 80C With Automated Income Tax Revised Form 16 Part B for A.Y.2021-22 as per Budget 2020 ( Old Tax & New Tax Regime)

In chapter VIA of income tax act, 1961, the most widely used option to save tax is section 80C. This section allows an individual and HUF to save tax by investing in or spend on certain specified avenues. The maximum limit up to which you can claim tax deduction under section 80C is Rs 1,50,000 for the financial year 2018-19 and 2019-20.

In this article, we will discuss certain expenses which are allowed as a deduction under section 80C before calculating tax payable on your taxable income. Before discussing please note, you can claim deduction only when you have spent money during the previous year on listed expenses.

Why to claim tax deduction

By claiming tax deduction of up to Rs 1,50,000, you reduce your taxable income by which you will be required to pay less or zero tax. For instance if your gross total income for the financial year 2019-20 is Rs 6,50,000 and you have invested or spent money during the year on specified avenues, then after taking deduction as per your eligibility  you can reduce your total taxable income to Rs 5,00,000. In such case, you will not be liable to pay tax as you will be eligible for tax rebate of Rs 12,500 under section 87A.

Tuition fees for children

Tuition fee paid for children qualifies for tax benefit under section 80C of the IT Act, 1961 within the overall limit of Rs 1,50,000.

Tuition fee that is paid at the time of admission or anytime during the financial year to any registered university, college, school or educational institution based in India qualifies for section 80C tax deduction. It can be a private or government institution.

However, please note only full time education including any play school activities, pre-nursery and nursery classes are eligible. Tuition fee paid for part time courses are not eligible for tax deduction.

Section 80C restricted the deduction for tuition fee to two children per individual. This means you can claim a tax deduction only up to two children. But if both husband and wife are paying tuition fee for their child then each of them will be eligible up to 2 children each.

Following fees paid to registered university, college, school or educational institutions do not covered for section 80C benefits;

·               Development fee

·               Donation

·               Capitation fee

Tax deduction for principal payment of home loans

Section 80C allow repayment of principal amount of home loan as a tax deduction up to the maximum limit of Rs 1,50,000. As discussed in the case of tuition fees, this limit is the total of all eligible deductions allowed under section 80C including contributions to public provident fund, sukanya samridhi yojana, payment of life insurance premium, 5 Years fixed deposits, equity oriented mutual fund, NSC, senior citizen saving schemes, tuition fees etc.

Tax deduction for principal payment of home loan is available for the amount which is paid during the financial year. It does not matter whether payments are related to earlier or future years.

Please note, tax benefits for repayment of principal amount of home loan is allowed only when the construction is complete and the completion certificate has been awarded. This means, deduction will not be allowed under section 80C for repayment of principal amount for those years during which the property was under construction.

In case the assessee transfers the house property on which he has claimed tax deduction under section 80C before the expiry of 5 years from the end of the financial year in which the possession has been obtained by him, then no deduction and tax benefit on home loan shall be allowed under this section. Aggregate amount of tax deduction already claimed in respect of previous years shall be deemed to be the income of the assessee of such year in which the property has been sold. Therefore, assessee shall be liable to pay tax on such income.

Please note, section 80C deduction for payment of principal amount on home loan is allowed only when the loan has been taken for purchase or construction of a new house property. It’s not allowed as a deduction if loan has been taken for repair or renewal or reconstruction of a residential house property.

Stamp duty and registration fee for purchase or construction of home

Amount paid towards stamp duty and registration fees for purchase or construction of home is allowed as a tax deduction under section 80C within the overall limit of Rs 1,50,000. 

It’s not a regular deduction that you get every year. If you have paid, then that amount can be claimed as a tax deduction under section 80C in addition to all other eligible deductions within the limit of Rs 1,50,000.

Apart from these expenses, you can also invest in any or all of the investment options listed under section 80C to get the full benefit of section 80C. Here is a list of the 6 most important investment options listed in section 80C to get tax deduction;

·               Public provident fund – PPF

·               Employee provident fund – EPF

·               Unit linked insurance plan – ULIP

·               Life insurance plan

·               Sukanya samridhi yojana – SSY

·               Equity-linked saving schemes – ELSS

Download And Prepare at a time 50 employees  Salary Certificate Revised Format of Form 16 Part B for the Financial Year 2020-21 and Assessment Year 2021-22

 

 

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As per Latest Finance Budget 2017 the Section 80,Plus Automated Income Tax Calculator (All in One) for West Bengal Govt Employees for F.Y 2017-18 & Ass Year 2018-19

Click here to Download the Automated Income Tax Calculator (All in One) for West Bengal Govt employees for the Financial Year 2017-18

A. Section 80C:- Entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs.1,50,000/-

(1) Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual.

(2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;

• New Introduce Kissan Vikas Patra (K.V.P.) U/s 80 C (From FY 2014-15)
• Provident Fund
• Saving certificates
• Unit-linked insurance plan of the LIC Mutual Fund referred to section 10 (23D) and as notified by the Central Government
• Any sums paid by an assessee for the purpose of purchase or construction of a residential house property
• Tuition fees
• Term deposit for a fixed period not below 5 Years
• Deduction in respect of contribution to certain pension funds (Section 80CCC)
• Deduction in respect of contribution to pension scheme of Central Government & Private Employees also( Passed by the Central Finance Budget)

(Section 80CCD):  Section 80CCD(1) allows an employee, being an individual employed by the Central Government or any other employer, on or after the 01.01.2004, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide Notification F. N. 5/7/2003- ECB&PR dated 22.12.2003 or as may be notified by the Central Government. However, the deduction shall not exceed an amount equal to 10% of his salary(includes Dearness Allowance but excludes all other allowance and perquisites).

As per Section 80CCD(2), where an employee receives any contribution in the said pension scheme from the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the previous year.

However, if any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of

(i) Closure or opting out of the pension scheme or

(ii) Pension received from the annuity plan purchased and taken on such closure or opting out then the amount so received during the FYs shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax. Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.

Further, it has been specified that w.e.f 01.04.09 that any amount received by the employee from the new pension scheme shall be deemed not to have received in the previous year if such amount is used for purchasing an annuity plan in the previous year.

It is emphasized that as per the section 80CCE the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) shall not exceed Rs.1,50,000/-. However, the contribution made by the Central Government or any other employer to a pension scheme u/s 80CCD(2) shall be excluded from the limit of Rs.1,50,000/- provided under this Section. In this Finance Budget 2014, the Non-Govt employees also entitled to get the benefits U/s 80CCD.

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