There are certain deductions that any salaried employee can avail of while filing their income tax return
Income Tax Benefits For Salaried Employees Filing ITR: There are certain deductions that any salaried employee can avail of while filing their income tax returns. There are certain deductions like standard deduction which are provided to employees in both the old and new tax regimes. But some tax benefits will not be available to employees opting for the new tax regime. Before you finalise your tax regime, take a look at which one is more beneficial for you and then make a decision.
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Here are some tax benefits that are available to salaried employees:
Deduction u/s 80C, 80CCC and 80CCD (1):
Employees can get a combined deduction of Rs 1.5 lakh under these sections for payments made against life insurance premium, provident fund, pension scheme of the central government, or annuity plan of LIC or any other insurer towards the pension scheme. This deduction is available only under the old tax regime.
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Section 80CCD(2):
Both the old and new tax regime offer deduction towards contribution made by an employer to central government’s pension scheme. If the employer is a public sector unit, state government or other organisation, the deduction limit is 10 percent of the salary. If the employee works for the central government, the deduction limit is 14 percent of the salary.
Home Rent Allowance:
The old tax regime also allows salaried taxpayers to claim deduction under Section 10 (13A) of the Income-tax Act, 1961. The HRA is calculated on the basis of salary, rent paid, city of residence and HRA paid by employer.
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Deduction u/s Section 24(b):
Those opting for the old tax regime can avail deduction u/s 24(b) for interest paid on home loans for self-occupied property. Those choosing the new tax regime can avail deduction on interest on home loans on rented property.
Standard deduction:
A flat deduction of Rs 50,000 is available under both tax regimes. Employees can avail the benefit regardless of the number of jobs they have changed.
Rebate u/s 87A:
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Both tax regimes offer rebate u/s 87A if their taxable income does not exceed a particular amount in a financial year. Under the old regime, it is Rs 5 lakh, while it is Rs 7 lakh in the new tax regime. Those opting for the old regime will get Rs 12,500 as rebate. To make the new tax regime more attractive for taxpayers, the central government is offering a rebate of Rs 25,000 u/s 87A.
