There’s considerable buzz about maximising tax refunds in India. There’s nothing amiss in aiming to save money, which you can achieve by ensuring you receive all the tax benefits you’re entitled to. Your proficiency in assessing different aspects of tax calculation can lead to a larger refund.
Taxpayers should use all available deductions and exemptions to reduce their tax liability. Examining the Income Tax Act is essential for comprehending the deductions and exemptions accessible to you while filing your Income Tax Return (ITR) in India. The deductions and exemptions vary based on your category whether you are a salaried individual, pensioner, or self-employed individual.
Also Read: Income Tax Return filing: Salaried individuals need to be aware of these 5 key points
Several deductions are encompassed within Section 80C of the Income Tax Act in India. This provision enables you to claim deductions for various investments and expenses, thereby, reducing your taxable income and potentially decreasing your tax liability. Here’s an overview of the deductions available to you:
The combined maximum limit for deductions under Section 80C for the fiscal year 2023–2024 (AY 2024–2025) is ₹1.5 lakh. All of the aforementioned investments and other Section 80C deductions are subject to this restriction.
Also Read: Submitted wrong ITR form? Know how many times you can revise return
You can deduct the premiums for your family, yourself, and, in certain cases, your dependent parents from your income tax under Section 80D of the Income Tax Act of India. The following are eligible to claim a deduction under this provision.
Premiums paid for health insurance policies provided by recognised insurance firms in India are tax deductible. This usually comprises individual health insurance policies, family floater plans, and critical illness plans. If your health insurance policy covers hospitalisation for Ayurvedic treatment, the premiums are also deductible under Section 80D.
Depending on your age and the person you are insuring, the maximum deduction limit under Section 80D for medical insurance premiums varies:
The deduction limit for preventive health check-ups is ₹5,000 per financial year, included within the overall limits mentioned above. While you can claim deductions for multiple health insurance policies, the total deduction cannot exceed the specified limit.
The documents needed to claim a deduction under Section 80D include:
Consider opting for a family floater health insurance plan to cover all family members under a single premium, potentially maximising your deduction. If you are a senior citizen and have dependent parents, ensure you pay their health insurance premiums to claim additional deductions. Remember, the deduction applies to premiums paid, not the total sum insured.
Also Read: ITR Filing: Exemptions and deductions that senior citizens can claim for FY24
You can lower your taxable income and, consequently, minimise your tax payment by claiming a deduction for home loan interest under Section 24 of the Income Tax Act of India.
Under this section, the following types of home loans are deductible:
The type of property and the loan’s original date determine the maximum deduction limit for interest paid on a home loan under Section 24.
The interest paid on a home loan during pre-construction may be written off, but only if it is done so in five equal instalments starting in the year the property is prepared for occupancy. Each co-owner may be eligible for a proportionate deduction based on their share of the loan repayment if the home loan is held jointly. Only the interest portion of the EMI paid on the home loan is eligible for deduction. Under certain circumstances, the principal repayment amount may be claimed under Section 80C but is not deductible under Section 24 of the Income Tax Act.
The House Rent Allowance (HRA) and Leave Travel Allowance (LTA) exemptions can help reduce your tax burden in India:
To qualify for HRA exemptions, you must meet certain conditions:
The prerequisites for availing of this exemption are:
Your tax refund, which is usually given for excess tax paid via Tax Deducted at Source (TDS) and Tax Collected at Source (TCS), may be impacted by discrepancies between Form 26AS and AIS. Your refund amount might be reduced if the TDS/TCS details on your Form 26AS (tax credit statement) don’t match the information in the Annual Information Statement (AIS).
The best strategy is to identify the source of the error.
Always reconcile TDS/TCS amounts on Form 26AS and AIS before completing your tax return. Keep detailed records, such as bank statements, salary stubs, and investment documents, to back up your claims in case of discrepancies.
Also Read: Income Tax: Filing ITR early this time? Here are 8 key strategies to optimise tax savings
It’s crucial that you file your income tax return (ITR) on time. The following are some advantages of filing your ITR by the deadline of July 31, 2024, for the fiscal year 2024–2025:
To guarantee a smooth ITR filing process, consider the following suggestions:
By submitting your ITR on time and following these guidelines, you can ensure a smooth and quick tax filing procedure.
Validating your bank account and providing precise information is critical to receive a seamless and timely income tax return. The verification process confirms that the bank account associated with your Permanent Account Number (PAN) is valid for receiving the reimbursement. You can pre-validate your bank account on the Income Tax Department’s e-filing portal by providing your PAN, name, and mobile number.
When filing your tax return, double-check your bank account details (account number and IFSC code). Any mismatch between the information supplied in the return and your real bank account can cause delays or rejection of the refund.
If you’re an employee, contemplate modifying your tax withholding at the source by submitting Form 16 to your employer. For self-employed individuals, make advance tax payments throughout the year to prevent a substantial tax bill at filing time. Remember to retain receipts, bills, and investment documents to substantiate your deduction claims in case of discrepancies with the tax department. Opting for e-verification is the quickest method to authenticate your return and hasten the processing of your refund.
Consult a tax advisor if your tax situation is complicated. Above all, make sure you’re claiming all the benefits you’re eligible for by staying current on tax laws. You can make better decisions, file your taxes more accurately, and possibly even get a bigger tax refund in India by putting these strategies into practice.
The best strategy is to identify the source of the error.
Always reconcile TDS/TCS amounts on Form 26AS and AIS before completing your tax return. Keep detailed records, such as bank statements, salary stubs, and investment documents, to back up your claims in case of discrepancies.
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