Don’t miss out on these benefits when filing your income tax returns
New Delhi: If you file your income tax return (ITR) this year using the pre-filled forms, you may miss some tax deductions that are not reflected on your Form 26AS or your annual information return and, therefore, don’t get self-filled out on RTI forms, tax experts say.
Don’t worry if you file your ITRs under the new tax regime which has removed nearly 70 tax deductions and exemptions. However, if you are filing your ITR under the old regime, you should closely monitor your spending for the past year to maximize the tax benefits available to you.
Here are four tax deductions you might forget to claim if you’re using pre-filled ITR forms.
Rent exemption without HRA
Employees who live in rented accommodation can use the House Rent Allowance (HRA) component in their salary package to reduce their tax burden. However, if HRA is not part of your salary structure, then according to section 80GG of the Income Tax Act 1961, you have the option of claiming a deduction from the rent paid. Here, the amount of the deduction will be the minimum of the following three:
– Actual rent paid minus 10% of total taxpayer income
– Rs 5,000 per month
– 25% of total income
The taxpayer must also meet other conditions to claim this deduction under section 80G. That is, the taxpayer should not own a house in the same town where he lives on rent, nor should there be a house in the name of the spouse, child minor or HUF of the taxpayer of which he is a member, in the city where his office is located or his activity is carried out
Deduction of interest from the savings account
Under section 80TTA, taxpayers can claim a deduction of up to Rs 10,000 on interest earned on the savings bank account. If the interest earned on the savings bank account is less than Rs 10,000, then the full amount will be exempt from tax.
It should be mentioned here that the deduction available under section 80TTA is not applicable to interest earned on term deposits, recurring deposits or term deposits.
Deduction on medical bills for uninsured parents
If you have elderly parents who are not covered by any medical insurance policies but have undergone medical treatment in the previous fiscal year, you can claim a deduction on their medical bills.
Under section 80D, you can claim up to Rs 50,000 as a deduction from the amount spent on medical care for dependent relatives aged 60 and over. Even money spent on drugs for elderly parents can be claimed as a deduction, tax experts say.
It should be mentioned here that most taxpayers do not claim this deduction despite spending over Rs 50,000 for their elderly parents’ medications and regular checkups every year.
However, to claim this deduction, you must have made the payment other than in cash. Although the taxpayer does not have to provide invoices or receipts when filing the ITR, they should keep the supporting documents for the transaction on hand.
If you made a donation to a Covid-19 relief fund or a government-recognized charity in the past fiscal year, you can also claim a deduction on that amount under section 80G. But the amount of the deduction will depend on where the donation is made.
For example, donations made to institutions recognized by the central government are eligible for a 100% deduction. In case the institution is a private institution, then only 50% of the total amount will be eligible for the deduction. However, donations in kind cannot be claimed as a deduction.
In addition, if you have made a cash donation, the deduction available can only go up to Rs 10,000, provided the donor has receipts to justify the transaction. In addition, to claim this deduction, the taxpayer must have the donee’s PAN.