Q. I am investing in HDFC Tax Saver-Dividend Reinvestment option through SIP. Can I claim tax rebate under 80C for amount of dividend reinvested. Please guide.
Yes, you can claim the tax benefit on the reinvested dividend amount in ELSS in the financial year in which the dividend is received. As ELSS is equity based fund and dividend earned from equity oriented funds is tax free. Hence dividend will always be tax-free in the hands of the investors, and if one claims tax rebate on this dividend by investing in any tax-saving instrument then this amount will be deducted from your taxable income. This will enable you to reduce your tax burden.