Filing ITR is mandatory under the income tax laws in India. However, you can also avail of some lesser-known benefits while filing your ITR if you are well aware of them.
Many people tend to look at the whole process of filing the IT return as a statutory job that needs to be taken care of at the earliest. Yet another set of people would file their return in haste when nearing the due date. In both cases, people are likely to ignore the benefits they can avail of while filing their ITR.
Four Benefits to Avail While Filing ITR
Apart from the usual deductions allowed under section 80C, taxpayers can also avail of the following exemptions if they choose the old tax regime while filing their ITR.
House rent allowance or HRA is the component of a salary that can be deducted from the taxable income. It can be noted here that HRA is not compulsory, and many employers do not provide HRA.
However, in the absence of an HRA component in salary, an employee can claim an income tax deduction under Section 80GG over the house rent paid, provided the employee stays in that house.
Note that you can’t claim a tax deduction on the rent paid if your employer reimburses the amount.
Interest on Savings Account
The interest earned on a savings account with a bank or a post office is taxable as per the prevailing tax slabs. However, an exemption can be availed on interest earned up to Rs 10,000 on your savings account under section 80TTA of the Income-tax act.
For example, consider a situation where you have three bank accounts from where you have earned a total of Rs 15,000 as interest income in a financial year.
Now you can first report this Rs 15,000 under “income from other sources” in your ITR. Thereafter, you can claim a tax deduction of Rs 10,000 under Section 80TTA.
Therefore, you will have to pay taxes on the remaining interest income, which is Rs 5000 (Rs 15,000- Rs 10,000) instead of the full Rs 15,000 that you have earned as interest income.
Parents Medical Bill
Taking care of your parents is one of the few duties that brings joy and emotional satisfaction, along with some tax benefits as well. Under section 80D of the income tax act, you can avail of a tax deduction of up to Rs 50,000 on the total amount spent on medical treatment of your parents.
Following conditions need to be fulfilled for claiming this deduction-
- Your parents are senior citizens. In case you bore the medical expenses of both parents where only one of them is a senior citizen, you can claim a tax deduction for the medical costs of the senior citizen parent only.
- Your parents are dependent on you.
Many people like to donate to various causes close to their hearts. During the pandemic, we all have seen large contributions made by various individuals towards different relief funds such as PMCares. Such donations are rewarded by the income tax department.
Donors can claim a tax deduction on a percentage of the donations made toward the government-recognized charitable foundations and relief funds under section 80G.
For example, donations made toward National Defence Fund or Prime Minister’s National Relief Fund is 100 per cent tax-exempt.
You can save a lot more on paying taxes if you start paying more attention to the exemptions discussed above. Besides, income tax filing can be much easier if you consider online filing as you can easily view the various exemptions available and compute accordingly.
Why bother paying more taxes when the tax department wants you to avail of those exemptions?