What deductions can be claimed on taxes

what deductions can be claimed on taxes

Last minute exemptions/deductions that can be claimed during IT filing

Last minute exemptions/deductions that can be claimed during IT filing

Did you fail to meet the deadline for submitting proof of investments to the employer before due date? You can still claim some deductions and exemptions and maybe get a refund while filing for Income Tax return. In this article, we would explain about last minute deductions which you can claim while filing income tax returns.

The employers ask employees for declaration of the their proposed investments for tax exemptions/deductions in Apr, which is the beginning of the financial year. This helps them to calculate the taxable income according to the investments proposed and deduct the tax accordingly. In the month of Jan or Feb the employer asks the employee to submit the proof. Based on the proof the employer will adjust the tax liability for that year. Employer issues Form 16 to his employees for each of the financial year (April to March of next year). Form 16 provides details of the salary income of the employee along with the Tax deducted at Source (TDS). What if the employee invests after the deadline for? There might also be cases when an employee invests more than proposed? Then your tax will be deducted without calculating the deductions allowed

Last minute exemptions/deductions that can be claimed during income tax filing

  • House rent and leave travel allowances are the most common exemptions that can be claimed.
  • Investments in PPF, NSC, ELSS, life insurance premiums, home loan principal repayment etc are some common deductions under 80C.
  • Interest on housing loan is a deduction under Section 24.
  • Other deductions include medical insurance premium (section 80D), interest on education loan (section 80E), maintenance of disabled dependent (section 80DD), etc.
  • If you have made an investment that is eligible for tax-saving, but it has not been considered by an employer, or you have made it after the last date set by your employer, then too it will not reflect in your Form 16. In that case too you can claim it while filing the return.

Provided you have made the investments before the financial year ends on March 31.

Points to be noted for claiming last minute exemptions/deductions during income tax filing

  • While the repayment of principal of home loan is eligible for tax-exempt under the overall limit of Rs 1.5 lakh, under Section 80C, the repayment of interest is eligible for tax-exemption under Section 24. If it

    does not get accounted for in your Form 16, then you can claim refund for the interest repayment of your home loan while filing the return.

  • The tax deductions available for investments such as life insurance premium, health insurance premium, tax-saving FDs, post office schemes, equity linked savings schemes, Rajiv Gandhi Equity Savings Scheme, PPF, etc. can all be claimed at the stage of filing returns even if the proofs weren’t submitted to the employer provided they were made before the financial year ends on March 31.
  • Even amount donated to charitable organizations before March 31 can be claimed for deduction, even if they weren’t mentioned in the investment proofs.

Are there any deductions/exemptions which cannot be claimed during IT filing?

Yes, there are few exemptions which you cannot claim during IT filing. For example the exemptions for leave travel allowance (LTA) and the medical expense reimbursement. Employers need to preserve the bills and documents before granting the tax benefit on LTA and hence if you fail to submit these proofs, you will have to bear the tax brunt. But LTA can be claimed twice in a block of four years and the present block is 2014-17. So you can either carry forward this benefit next year or claim exemption for fresh travel next year.

How to claim exemptions/deductions while filing income tax return?

  • While filing returns the Form 16 figures will have to be entered in the income tax return form with caution if the employee is claiming exemption like HRA.
  • For deductions one would have to fill in details in the appropriate section in ITR.
  • After filing the return with the actual investment details, additional taxes, cut by the employer would be returned by way of refunds as an employer would have cut higher taxes as the deductions were ignored.
  • Please note that in spite of employer deducting more TDS, the employee may have to pay tax if his tax liability is more. So employee may not always claim a refund.

Planning ahead for the next year and submitting proofs on time would help you avoid the hassle of claiming income tax refunds.

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This post is written by Kirti of Bemoneyaware. one of the top bloggers in India. This article is as part of our new initiative "articles from top bloggers on myinvestmentideas.com".

Source: myinvestmentideas.com

Category: Taxes

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