Income Tax Return: The salaried individuals who live in rented accommodation can use the House Rent Allowance (HRA) component in their salary package to deduct their tax outgo while filing ITR.
Income Tax Return Latest Update: Every year, taxpayers file Income Tax Return but many times they forget to claim several deductions. For this reason, they need to file ITR in advance so that they get ample time to evaluate all the deductions, small and big, that they can claim. Apart from the sought-after deductions under Section 80C on insurance premium, equity-linked savings schemes (ELSS) and Public Provident Fund (PPF), there are a bunch of lesser-known deductions that taxpayers often miss out while filing ITR. They also miss out claiming certain tax breaks that may not reflect on their Form 26AS.
As per the fresh guidelines, the new tax regime has done away with 70-odd tax deductions and exemptions. However, if the taxpayers are planning to file ITR under the old regime, it would pay to look deeper into the finances from last financial year and maximize the tax benefits available to you. Here, we will discuss four tax breaks that you must avail while filing ITR.
Exemption on HRA: The salaried employees who live in rented accommodation can use the House Rent Allowance (HRA) component in their salary package to deduct their tax outgo. However, not all employers offer HRA. If the HRA is not part of the salary component, the taxpayer has an option under Section 80GG of the Income Tax Act to claim deduction on rent. It must be noted that the rule of owning a house in the same city is not applicable if the taxpayer takes tax exemption on HRA
Exemption on savings account interest: The taxpayers must be knowing that the interest earned on a savings account with a bank or post office is added to the total income and taxed at slab rates. However, they can claim a deduction of up to Rs 10,000 on interest income from savings account under Section 80TTA of the I-T Act. After reporting all the interest income earned in a financial year in the ITR, they can claim a deduction of up to Rs 10,000 on it.
Exemption on medical bills of uninsured parents: While filing ITR, the taxpayers can claim the medical bills of the uninsured parents. Due to COVID pandemic, many people purchased health insurances and these insurances not only help tide over a medical emergency but also give tax breaks. If you have senior citizen parents who are not covered under any insurance policy but took medical treatment, you can claim deduction on their medical bills. For this matter, section 80D allows up to Rs 50,000 deduction on the total amount spent on medical treatment of dependent parents aged 60 years and above.
Exemption on donations: Since the outbreak of the pandemic, many people made large donations to various covid-19 relief funds. However, few people know that the taxman rewards charitable services by offering tax deduction on donations. As per the rules, the donations made to institutions backed by the central government are eligible for 100% deduction and 50% of the total amount made to a private institution can be claimed. However, the donations made in kind, including in the form of clothes, ration, medicines cannot be claimed as deduction. On the other hand, the cash donation can be claimed up to Rs 10,000, provided the donor has receipts to back the donation.
