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Home / Money / Personal Finance /  Don't miss these benefits while filing your income-tax returns

In the current assessment year, the newly introduced e-filing portal comes with  the facility of pre-filled forms. However, that may also mean that a taxpayer may miss out on claiming certain tax breaks that may not reflect on his/her Form 26AS or Annual Information Statement and thereby, not get auto-populated on the ITR forms.

The new tax regime has done away with 70-odd tax deductions and exemptions. However, if you are planning to file your tax return under the old regime, it would pay to look deeper into your finances from last financial year and maximize the tax benefits available to you.

Mint tells you four tax breaks that you must avail in your ITR.

Exemption on house rent without HRA

Salaried individuals who live in rented accommodation can use the House Rent Allowance (HRA) component in their salary package to lower their tax outgo. However, not all employers offer HRA.

If HRA is not part of the salary component, the taxpayer has an option under Section 80GG of the Income Tax Act to claim deduction on rent.

Ritesh Kumar, partner, IndusLaw, explained, “The quantum of deduction under Section 80GG is the least of the following: (a) actual rent paid minus 10% of the taxpayer’s total income; (b) 5,000 per month; (c) 25% of the total income."

Vivek Jalan, partner, Tax Connect Advisory Services LLP said there are certain conditions under which tax deduction under Section 80GG can be claimed. “Only if HRA is not part of the salary package, one can claim deduction on rent. Further, the taxpayer should not own a house in the same city where he is living on rent, nor should there be a house in the name of the taxpayer’s spouse, minor child or HUF of which the person is a member of, in the city where his/her office is located or business is carried out."

The rule of owning a house in the same city is not applicable if the taxpayer takes tax exemption on HRA.

There could be a scenario when a taxpayer switched jobs in the financial year 2020 or was employed with an employer offering HRA only for a certain part of the year. Taxpayers have two options in this case.

“If you are not employed for a part of the year and for the other part you have received HRA income from an employer, the taxpayer should have the right to claim a more beneficial deduction by foregoing another exemption. So, the taxpayer can choose between 80GG exemption and HRA exemption and surrender the other. However, the authorities might choose to contest this," said Jalan.

When the taxpayer switched jobs and had HRA as part of salary from both the employers, the amount to be claimed as exemption under Section 10(13A) should be calculated on total salary received from both the employers, said Maneet Pal Singh, partner, I.P. Pasricha & Co.

“An employee should submit his Form 16 from the first employer with the second employer, so that they can arrive at the correct calculation of HRA. If the same is not available, then make the actual calculation as per section 10(13A) at the time of filing ROI and claim benefit of HRA on the total salary," he added.

Deduction on savings account interest

Interest earned on a savings account with a bank, post office or a co-operative society conducting the business of banking is added to the total income and taxed at slab rates. Taxpayers can claim a deduction of up to 10,000 on interest income from savings account under Section 80TTA of the I-T Act.

Once you report all the interest income earned in a financial year in your ITR, you can claim a deduction of up to 10,000 on it. If the total amount falls below the threshold, the entire amount will be tax-free. Take note that this deduction is not allowed on interest income from fixed, recurring or time deposits.

Deduction on medical bills of uninsuredparents

Covid-19 was a rude wake-up call to the importance of buying adequate health insurance. Insurance not only helps tide over a medical emergency but also gives tax breaks.

However, if you have senior citizen parents who are not covered under an insurance policy but took medical treatment during the year, you can still claim deduction on their medical bills.

Section 80D allows up to 50,000 deduction on the total amount spent on medical treatment of dependent parents aged 60 years and above. Even money spent on buying medicines for senior parents can be claimed as deduction.

Karan Batra, founder, charteredclub.com, said that most people easily spend 50,000 towards elder parents’ regular medicines and other check-ups and yet miss out on claiming deduction on it.

Deduction on medical expenses can only be claimed for payments made in any payment mode other than cash. Though the taxpayer doesn’t have to furnish bills or receipt at the time of filing ITR, they must keep the supporting transaction documents ready with them.

Deduction on donations

2020 also marked the year when people made large donations to various covid-19 relief funds. However, few know that the taxman rewards charitable services by offering tax deduction on donations.

The degree of deduction allowed depends on where the donation is made. Donations made to institutions backed by the central government are eligible for 100% deduction, while only 50% of the total amount made to a private institution can be claimed. Donations made in kind, including in the form of clothes, ration, medicines etc, cannot be claimed as deduction.

Further, cash donation can be claimed up to 10,000, provided the donor has receipts to back the donation, whereas donations made through all other payment methods are eligible for full deduction. To claim the deduction, you must also provide PAN of the donee.

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