Filing income tax returns can be a painstaking activity but can reap amazing benefits if done intelligently. Most employed individuals or those with businesses have to file income tax returns (ITR) at the end of each financial year in March.
From claiming House rent allowance to returns on tax-free investments, many benefits can be claimed if individuals are adept at the process. Income Tax laws allow individuals to save taxes under various sections. However, many fail to claim these extended tax benefits due to lack of awareness.
Having said that, here are some deductions that you can claim while filing income tax:
Salary structure balance
Financial advisors often ask individuals to stay updated about which tax slab they fall under or the components that comprise his/her full salary. This comes in really handy while minimising tax outgo. In most organisations, there are components such as House Rent Allowance and LTA, which can be claimed while filing taxes i.e. if you have not yet received these components of your salary. You can also discuss your salary structure with the company and try to keep the basic taxable income low while drawing higher amount through conveyance and other components.
Save tax on House Rent Allowance
While filing ITR, you can claim House Rent Allowance, which forms a major portion of a salaried individual’s cost to company (CTC). If an individual lives in a rented house and has proof of the same, he/she can claim deduction on the same under Section 10 (13A) of the Income Tax Act.
However, it must be noted that individuals are entitled to partial tax benefit on the rent paid on a monthly basis. The benefit varies from city to city. If you are staying in your own house or not paying any rent, the HRA claim does not apply to you.
Deductions under Section 80 (C), 80(CCD), 80(TTA)
Some investments are completely tax-free and deduction on the same can be claimed while filing taxes. Under Section 80(C), individuals are allowed tax benefits up to Rs 1.5 lakh. People can invest in popular schemes such as PPF, ELSS, fixed deposits, LIC and many more.
However, those looking for deductions above Rs 1.5 lakh, you can do so by investing another Rs 50,000 towards National Pension System (NPS) for claiming benefits under Section 80(CCD). If you happen to earn any interest up to Rs 10,000 in a financial year from a savings account, it is eligible for deduction under Section 80 (TTA) of the Income Tax Act.
Deduction under Section 80(E)
In case you have taken an education loan for yourself, spouse or children, the interest paid on the loan can be mentioned as a tax benefit under Section 80(E) of the Income Tax Act. The only criteria that individuals have to follow are to take the loan from a financial institution.
Tax deduction on home loan interest payment
If an individual is currently paying interest on existing home loan up to Rs 2 lakh, they are eligible to claim deduction under Section 24 of the Income Tax Act. A home loan could be towards purchasing a property, construction, maintenance or even restoration. However, if you want to claim deduction under the particular section, it is mandatory to acquire the property within five years from taking the loan.
Deduction under Section 80(D)
Any premium that an individual is currently paying towards health insurance (for self, spouse, children or parents) qualify for deduction under Section 80(D) of the Income Tax Act. One can claim deduction of Rs 25,000 if his/her age is below 60 years and Rs 30,000 if age is above 60 years. One can claim an additional deduction of Rs 25,000 if insurance is bought for parents. If insurance is claimed for both parents (above 60 years), the total deduction that can be claimed is Rs 60,000.
