Income Tax Deductions that most people miss while filing Income Tax Returns
At this time of the year, everyone is racing to submit their Income Tax Returns (ITRs) for the Financial Year (FY) 2021-22. The due date for submitting income tax returns for professionals, employees, and owners of the non-auditable case is July 31, 2022.
Annual Information Statement (AIS), a recently adopted statement that includes information on all financial activities the tax department is aware of regarding the taxpayer. The information from AIS should be taken into account when filing the return, and any discrepancies should be noted in the feedback option.
Here we are mentioning Income Tax Deductions that most people miss while filing Income Tax Returns:
Donations to registered charitable organizations or NGOs may be deducted. To claim a deduction under section 80G beginning in Financial Year 2021-22, a certificate in Form10BE must be obtained from the donee.
Section 10 (32)
A parent may claim a Rs 1,500 exemption for each minor child whose income is includible under section 64. (1A).
Section 10 (10CC)
If the employer bears the employee’s tax liability, the employee has the opportunity to save taxes.
Long-term capital gains arising from the transfer of equity shares in a company, units of an equity-oriented fund, or units of a business trust are exempted up to Rs 100,000. Gains in excess of Rs 1,000,000 will be taxed at a rate of 10%.
Section 80TTA and Section 80TTB
For taxpayers who are not elderly people, section 80TTA allows them to deduct up to Rs 10,000 for interest on bank savings accounts. But interest earned on time deposits, like fixed deposits, is taxed. For the purpose of the deduction, interest on time deposits is also covered, and the ceiling is increased for elderly citizens to Rs 50,000.
Section 80D (Preventive Health Check-Ups )
In addition to claiming a deduction for medical insurance premiums and medical expenses for self and family, the amount paid for preventive health check-ups (including cash payments) for self, spouse, and dependent children can be claimed for up to Rs 5,000.
Section 44ADA/Section 44AD
Section 44ADA allows specified professionals with gross receipts from a profession of up to Rs 50 lakh to claim at least 50% of the gross receipts as taxable income. Taxpayers with business income of up to Rs 2 crores who are not covered by section 44ADA may declare income under section 44AD, where at least 8% of gross receipts may be presumed to be taxable income. The limit on the number of receipts received through banking channels shall be 6% of such receipts.
Section 80CCD (1B)
An individual’s contribution to an NPS is eligible for an additional deduction of Rs 50,000.
Section 80E allows an individual to deduct interest on a loan taken from any financial institution or approved charitable institution for the purpose of pursuing higher education for one or more of his relatives while calculating total income.
Under section 80GG, an individual who has not received a house rent allowance (‘HRA’) in a year can claim deductions for rent paid towards accommodation up to a maximum of Rs 60,000 per annum. For the purpose of claiming a deduction under this section, a declaration in Form-10BA must be provided.