How To Claim Deduction Under Section 80C Without Making Any Investment?

People often ask two questions from the Tax Advisors and Chartered Accountants:

•  Can I claim 80C without investment? or
• Can I save Tax without Investment?

In this article, we will discuss and these two questions and give answers according to the provisions of the Income Tax Act,1961.

While computing the total taxable income of an Individual or HUF, a deduction of Rs.1,50,000 is given under the Income Tax Act,1961. In order to claim this deduction, you have to make investment of Rs.1,50,000 into the specified saving schemes prescribed under the Income Tax Act,1961. List of major investments for which deduction is allowed,is given below:

1. Investment in PPF/EPF
2. Insurance Premium & ULIP
3. Tax Saving Fixed Deposits for a tenure of 5 years
4. Infrastructure Bonds
5. Sukanya Samriddhi Yojana
6. Equity Linked Saving Scheme
7. Investment in Senior Citizen Saving Scheme
8. National Saving Certificate

As you can see that for availing the deduction under section 80C you will have to make an investment of Rs.1,50,000 in any one or more options prescribed in the above List. People may find it inconvenient to make this investment for variety of reasons. So, are there any other options available where we can avail this deduction without making investment in any of the above schemes?

The answer is YES. 

There are 2 other methods, where you can claim the deduction under section upto Rs.1,50,000 without making any investment in the options prescribed. These 2 options are given below:

1. In case you have purchased any property during the financial year and has paid any Stamp Duty/Registration Charges for purchase of this property, then this whole amount upto a maximum of Rs.1,50,000 can be claimed as a deduction under section 80C
2. In case you have taken a Home Loan for the purchase of the property, then you are required to pay EMIs of this Loan every month. These EMIs have two parts-one towards the principal and other towards the interest. For example if during any financial year you have paid total EMIs of Rs.3,60,000/-, then if you look at the bifurcation of this amount from the Bank Certificate, then you may find that out of the total amount of Rs.3,60,000/- the Interest portion is around Rs.2,00,000/- and the principal portion is around Rs.1,60,000/-  You must be claiming the interest portion of Rs.2,00,000/- under section 24 of the Income Tax Act. But you will be surprised to know that the balance remaining principal amount of Rs.1,60,000 can also be claimed as a deduction from the taxable income under Section 80C upto the maximum limit of Rs.1,50,000/-

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