ITR Filing: 6 Ways to Get Exemption on Income Tax
As the income tax department now allows online ITR filing for the assessment year 2024-25, taxpayers must be aware of deductions they can get on their income tax. The last date for filing income tax returns (ITRs) for FY 2023-24 (AY 2024-25) is July 31, 2024. Starting FY 2023-24, the new tax regime has become the default tax regime that allows basic exemptions up to Rs 3 lakh. You may have failed to inform your employers of certain expenses and tax-saving investments, such as investments in the Public Provident Fund (PPF) or investments in ELSS mutual fund schemes. Or you may have missed submitting the required documents to claim house rent allowance (HRA), though you lived in rented accommodations during FY 2023-24. But taxpayers can still get deductions while filing ITR, even if you missed submitting some documents to your employer.
6 Ways To Get Deduction
HRA Tax Exemption
Despite missing the March 31, 2024 deadline to submit the rental agreement to your employer, you can still claim the House Rent Allowance (HRA) tax exemption when filing your ITR. and receiving HRA, ensure to include this exemption to reduce your tax burden. You can claim for HRA exemption under the old tax regime if you are a salaried or self-employed person who lived in a rented flat during FY 2023-24. If annual rent exceeds Rs 1 lakh, you have to report your landlord's plan to claim an exemption. A private company employee can avail HRA of 50 per cent of the basic salary in metro cities and 40 per cent of the basic salary in non-metro cities.
Deductions Available Under Section 80C
Use investment options like the National Pension System (NPS), Equity-Linked Savings Scheme (ELSS), Unit Linked Insurance Plan (ULIP), and Public Provident Fund (PPF) under this section to avail tax deductions up to Rs 1.5 lakh. Further life insurance premiums paid for policyholder, spouse, and children, Sukanya Samriddhi Account contributions also qualify under this section.
National Savings Certificate (NSC), 5-year tax-saving Bank FDs and Post Office Time Deposit Schemes also offer up to Rs 1.5 lakh deduction.
If you have not made investments before March 31, 2024, then compare income tax in two regimes and choose the one that benefits you when filing ITR.
Use These Expenses
Several expenses are eligible for deductions under income tax rules such as tuition fees for up to two children, registration or stamp duty charges for a home or property, and principal repayment of home loans. Ensure to include these expenses while filing your ITR to maximize tax benefits. But note that the maximum deduction that can be claimed is Rs 1.5 lakh in a financial year.
Tax exemption on interest paid towards children's education loans is available under Section 80E with no maximum limit. The exemption can be claimed by either parent who is repaying the loan. Interest paid on a home loan can be exempted under section 24 up to Rs 2 lakh.
NPS Investment
Under the new tax regime, one can invest in the National Pension System (NPS) to save up to Rs 2 lakh on your taxes. Apart from a deduction of Rs 1.5 lakh under Section 80CCE, coupled with Rs 50,000 exclusively available to NPS (Tier I account), corporate subscribers can enjoy extra tax benefits under Section 80CCD (2) of the Income Tax Act. Using NPS, individuals can secure their retirement and also reduce their tax liabilities. No tax benefit is allowed on investment towards Tier II NPS Account. A copy of the deposit of receipt of the amount for the year can be used when filing an ITR to claim the deduction.
Deductions Under Section 80(D)
One can use payments of premiums for health insurance policies to claim deductions of up to Rs 25,000 under Section 80D. Further, if the premium is paid for a senior citizen who is your parent, a deduction of up to Rs 50,000 can be claimed. If you haven't submitted your insurance premium receipts to your employer before March 31, 2024, you can still claim these deductions when filing your Income Tax Return (ITR).
If your senior citizen parents aren't covered under any health insurance policy, and you had to spend money on medical bills for them in the previous FY, you can claim a deduction on these medical bills. Further, you can also claim a deduction of up to Rs 5,000 for preventive health check-ups taken during the year, under Section 80D.
Interest from Savings Account
Section 80TTA of the Income Tax Act allows interest earned from savings accounts to be deducted from your tax liability and the maximum deduction allowed is Rs 10,000 in a financial year.
A senior citizen can claim a deduction under Section 80TTB for interest earned from savings accounts, fixed deposits, and post office deposits up to Rs 50,000.
