Ways you Could Lose your Tax Benefits

Ways you Could Lose your Tax Benefits

There are a few things to be kept in mind, instead of calculating the tax to be paid. The taxpayer must take takes time to pay attention to  few things.

Many investors don’t know the benefit of deductions under 80 C of the Income tax act that it comes with a lock-in period.

Pay attention to  the following details when you are finalizing investment.

Termination of life insurance policy

Before taking any insurance plan, study well about it, its maturity period, benefits, and every minor point. If you took any plan in greed of tax benefit under 80 C, and at a later time you realize that this plan is not good for you.

Tax benefit will be terminated if you withdraw policy. If you terminate the policy before paying premiums for two years, the tax relief sanctioned will be revoked.

Repayment of home loan principal

If you sell your house within five years, you have to give the tax benefit. The entire amount to be deducted under section 80 C is to be claimed when you sell your house. The tax will be paid in the year in which you sell your house.

Rollback of tax incentive under RGESS

With the introduction of the new scheme Rajiv Gandhi Equity Scheme, the retail investors who earn less than Rs 10 Lakh can invest into it with the initial budget of Rs 50, 000 and can get claim 50% deduction.

This scheme comes within lock-in period of 3 years.

Withdrawal from senior citizens savings scheme

Investment in senior citizen saving schemes gives attractive returns. It also provides the minimum lock-in the period, but if you decide to get the benefit premature, then you have to pay a hefty amount.

The taxable amount on pre-mature withdraws will not be added to the already paid tax on the accrual basis.

If you are a senior citizen and you don’t have any other source of income, the effect will be significant to you.