According to tax experts, there is a possibility of a taxpayer missing out on claiming certain tax deductions that do not reflect on form 26AS or Annual Information System, and, therefore, not get auto-populated on the pre-filled income tax return (ITR) forms.
There is no reason to worry if the returns are being filed under the new tax regime, under which nearly 70 tax deductions and exemptions have been scrapped. However, in order to maximise the tax benefis available, it is important to closely scrutinise the expenses from the previous financial year, if the returns are being filed under the old tax regime.
Here are four tax deductions that a taxpayer may forget while filing returns using pre-filled ITR forms:
(1.) Exemption on house rent without HRA: If the House Rent Allowance (HRA) is not a component in a worker’s salary structure, then, as per section 80GG of the Income Tax Act, 1961, there is an option to claim deduction on the house rent paid. The quantum of deduction would be whichever is the minimum among actual rent paid minus 10 per cent of the taxpayer’s total income, ₹5000 per month, and 25 per cent of the total income.
(2.) Deduction on savings account interest: Section 80TTA of the IT Act allows the taxpayers to claim a deduction of up to ₹10,000 on the interest earned from the savings bank account. The deduction would be tax-free if the interest from the savings bank account is less than ₹10,000.
However, such deductions do not apply to the interest earned from fixed, recurring or time deposits.
(3.) Deduction on medical bills of uninsured parents: Under section 80D, deductions amounting to up to ₹50,000 can be claimed on the amount spent on the medical treatment of parents who are aged 60 or above. To claim this deduction, the payment should have been made in any mode except cash.
(4.) Deduction on donations: The same section also allows taxpayers to claim a deduction on the amount donated to a Covid-19 relief fund or any charitable institution recognised by the government. The quantum of deduction will be 100 per cent and 50 per cent in case of donations to central government-recognised institutes and private institutes, respectively.
For cash donations, deductions of only up to ₹10,000 are available.