ITR Filing: Want to Increase Tax Savings; Know What Deductions can be claimed in Old and New Tax Regime
The Deadline for ITR Filing for FY 2023-2024 is 31st July 2024 and approaching soon. Taxpayers have less than one month to file and process their returns. So, if they want to reduce their tax liability they need to know how to reduce taxes. They can save it by the way of finding out all the deductions available under both regimes – be it the new or old tax regime. And, choose the regime accordingly in which more taxes can be saved. Let’s now look at some of the deductions you can seek under both regimes.
Old Tax Regime: What are the Deductions You Can Claim?
There are plenty of deductions available under the old tax regime wherein the tax can be reduced by a considerable amount like a basic standard deduction.
Deductions Under Sections 80C, 80CCC, 80CCD (1), 80CCD(1B), and 80CCD (2)
1. Section 80C: Up to Rs.1.5 lakh can be asserted for investment in different government schemes.
2. Section 80CCC: If you contribute to certain pension funds then you might qualify for a deduction of up to Rs.1.5 lakh.
3. Section 80CCD(1): Upto 20% of gross total income can be asserted for self-employed and 10% can be asserted of the salary for employees under contribution to the National Pension System (NPS), capped at Rs.1.5 lakh.
4. Section 80CCD(1B): You can get a deduction of Rs.50,000 under the NPS contribution.
5. Section 80CCD(2): Besides this, your employer’s contribution to the NPS is saved at least 10% of your salary.
Deductions Under Sections 80D, 80DD, 80DDB, and 80U
1. Section 80D: Amounts like premiums paid for health insurance can also be deducted. The limits are Rs.25,000 for yourself and your family whereas an extra Rs.25,000 for parents.
2. Section 80DD: Provide deductions to families to meet the medical expenses of a dependent with a disability, the family can claim up to Rs.75,000 if disability ranges between 40% to 80% and Rs.1.25 lakh for severe disability i.e. more than 80%.
3. Section 80DDB: For specified diseases, you can claim up to Rs.40,000, in case of if you are below the age of 60 years.
4. Section 80U: Individuals having a disability can assert a deduction for themselves which is up to Rs.75,000 and Rs.1.25 lakh for having severe disabilities. To be eligible for this deduction, the disability should be at least 40%.
Deduction Under Sections 80E, 80EE, 80EEB
1. Section 80E: Interest paid on education loans for higher studies can be claimed without any upper limit, but only for a maximum of 8 years.
2. Section 80EE: First-time homebuyers can claim an additional deduction of up to Rs.50,000 on home loan interest. It covers the home loan upto Rs.35 Lakh sanctioned between April 1, 2016 to March 31, 2017, and the worth of the property should be Rs.50 Lakh.
3. Section 80EEB: Interest on loans for purchasing electric vehicles can be claimed up to Rs.1.5 lakh.
Deduction Under Section 80G
Donations to specified funds and charitable institutions can be claimed under Section 80G. The deduction amount varies based on the type of donation and the receiving institution.
Deduction Under Section 80GG
If you do not receive House Rent Allowance (HRA), you can claim a deduction for rent paid under Section 80GG, subject to certain conditions and limits.
Deduction Under Section 80TTA
Interest credited or paid on savings accounts is deductible up to Rs.10,000. This deduction is available to an individual assessee and also to all members of a Hindu Undivided Family.
Deduction under Section 80TTB
Under Section 80TTB, a senior citizen can claim a deduction regarding interest income from the said limits on a bank, post office, or cooperative bank to a maximum deductible limit of Rs.50,000.
New Tax Regime: What are the Deductions that can be claimed?
The new tax regime came with lower tax rates but removed most of the exemptions and deductions available under the old regime. Nevertheless, it still provides for some important reliefs:
1. Standard Deduction: A standard deduction of Rs.50,000 is available for salaried and pension classes.
2. Employer’s contribution towards NPS: The contributions made by the employer towards the National Pension System of an individual continue to remain excludable from tax.
Where the new tax regime simplifies the tax structure with lower rates, it is essential to compare with the old regime to check which one is more beneficial to you, based on your income and your eligible deductions.
Your decision should be made considering the status of your finances and also the deductions for which you are eligible. You can reduce your tax liability a lot if you are well-experienced enough to use the right deductions available. Make an informed decision to maximize your savings and ensure a smoother ITR filing process for FY 2023-2024.
