Filing income tax returns? Keep these lesser-known deductions in mind
What's the story
The last date for filing income tax returns for the financial year 2021-22 or assessment year 2022-23 is July 31. This is a must for citizens if their total annual income exceeds the taxation limit, i.e., Rs. 2.5 lakh for people below 60 years and Rs. 5 lakh for people above 60. Here, we have mentioned certain deductions that can reduce your tax liability.
Method #1
Avail deduction by paying rent to parents
Under Section 10(13A) of the Income Tax Act, 1961, you can avail a house rent allowance (HRA) exemption by paying rent to your parents. The exemption entitled to you will be the least of the following: A) HRA sum received. B) 50% of the salary if the house is rented in Kolkata/Delhi/Mumbai/Chennai (40% for non-metros). C) Rent paid minus 10% of the basic salary.
Method #2
Investing in pension products is a good idea
If you have contributed to the annuity plan of an insurance company, you can claim a deduction for the sum paid from the gross total income. Under Section 80CCC, taxpayers can claim deductions worth Rs. 1.5 lakh for buying pension products. Citizens can also claim additional benefits of Rs. 50,000 under Section 80CCD by contributing to the National Pension Scheme (NPS).
Method #3
You can get deductions by donating to charitable firms
Under Section 80G, if you donate money to a charitable organization via cheque, cash, or draft, you can claim an income tax deduction on it. There's no upper limit for the deduction that can be claimed for donations. But donations above Rs. 2,000 made in cash can't be allowed as deductions. Also, not all NGOs and charitable firms can provide you with a deduction.
Method #4
Deductions on medical insurance premiums are offered
You can claim a deduction on insurance premiums under Section 80D if you buy medical insurance for yourself, your partner, or dependent children/parents. Taxpayers can claim up to Rs. 25,000 for paying medical insurance premiums. If parents are senior citizens, a deduction worth Rs. 50,000 can be made. Meanwhile, for payment of preventive health checkups, every individual can claim up to Rs. 5,000.
Information
Buying EVs can lower your taxable income
Under Section 80EEB, taxpayers can get a deduction of up to Rs. 1.5 lakh for the interest paid on loans for purchasing electric vehicles. You can claim interest payments above Rs. 1.5 lakh as a business expense.