Before investing for Sec 80C tax break, find out how much you really need to put in

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Before investing for Sec 80C tax break, find out how much you really need to put in

The deadline for investing to save tax is fast approaching. For many, this period is fraught with worries about investing enough to save as much tax as possible under Section 80C. But this might not be something you need to lose sleep over. Follow these steps to find out if you really need to invest at all.

First, check out your total contribution to the Employees’ Provident Fund (EPF) account during the financial year. For salaried individuals, this is usually a decent sum that helps save a good amount of tax. For instance, if you have a basic salary of Rs 15,000 per month, your yearly EPF contribution would be around Rs 21,600 (usually 12% of basic), which is eligible for deduction.

Second, you need to understand that Section 80C does not cover only investments. It also includes various expenses that are eligible for tax deduction. Many people don’t know that the tuition fees of up to two children are eligible for deduction. Given the rising cost of education, this is a welcome relief for many parents with school-going children, as it can take care of a large portion of the Section 80C limit.

The next big expense that you can get tax deduction for is the home loan EMI that you pay (principal portion). This can also exempt you from paying a significat amount of tax. For example, if you pay a home loan EMI of Rs 20,000, you could claim a tax deduction of close to Rs 84,000 per year for the principal portion. The stamp duty and the registration charges for a house bought during the year are also eligible for the deduction.

Further, if you include the premiums of your existing insurance policies, you might discover that your tax planning under Section 80C is already taken care of. “If eligible expenses take care of 80C, no additional investments need to be made,” says Archit Gupta, Founder & CEO, ClearTax. “Taxpayers can then consider other tax saving avenues such as medical insurance premium or NPS, or invest the available funds in other options,” he adds.

So, before you worry about investing in tax saving instruments, carefully tally up your EPF, children’s tuition fees, and home loan EMIs, etc. to see if the 80C limit of `1.5 lakh has already been reached. If it hasn’t, you have time until March 31 to make tax-saving investments. Even if you fail to submit investment proofs to your employer in time, you can claim these tax benefits directly in your tax return.
Save tax without investing more 
Here are the deductions you can claim without making additional investments. 

Before investing for Sec 80C tax break, find out how much you really need to put in*Ass uming a basic salary of Rs 15,000, home loan EMI of Rs 20,000 per month, and tuition fees of Rs 40,000.

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