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Opted for old tax regime? Here's how to avail income-tax benefits

opted for the old tax regime and want to make tax saving investments to avail the income tax benefits. What are the maximum tax deductions one can avail under the old tax regime in the current financial year? KM Basha, Bangalore

Opted for old tax regime? Heres how to avail income-tax benefits

opted for the old tax regime and want to make tax saving investments to avail the income tax benefits. What are the maximum tax deductions one can avail under the old tax regime in the current financial year? KM Basha, Bangalore

There are probably many reasons for unpunctuality. Many of us are habitually tardy or tidsoptimists, as we think there is enough time to do the task and keep it on the backburner. Too often, we completely immersed ourselves in work or were just so busy that we did not manage to grant ourselves the time to do this annual tax investments ritual. Those who are perpetually late will make hasty investment decisions to become a victim of mis-selling, or you will be forced to invest in the wrong financial product. Moreover, your employers may not accept the income tax proof submission after the due date. As a result, your tax savings will not reflect in the allowances and deductions part of your Form16 despite investing. Do not wait until March 2022 to invest in tax savings, and do not ignore your employer's reminder emails. But the employee or assessee can still save on taxes and get a refund from the I-T Department after filing tax returns for the respective assessment year.

Here are some last-minute tips for submitting proofs that will help you plan more incisively. Most employees are entitled to House Rent Allowance (HRA) as part of the salary. However, some assessees submit false receipts despite owning a house in the same city or produce fake receipts in an attempt to inflate the rent amount. A few individuals claim Rs 8300 to avoid reporting the landlord's PAN. Beware, the Income-tax department cross verify and tally your claims against your landlord's returns through PAN (if the rent amount is higher than one lakh per annum. The I-T Department is armed with sophisticated software that keeps a close tab and will ferret out all fake claims when something is fishy, irrespective of whether the landlords' PAN is provided or not provided. Avoid doing this as such malpractices attract income tax notice and subsequent penalties. Income tax saving options can be divided into five categories: Investments, insurance, savings, expenses, and loan repayment.

Section-wise income tax deduction options

24: Interest deduction on repayment of housing loan up to Rs2 lakh.

80C: Premium on Life insurance, EPF, VPF, PPF, NSC, NPS, Senior Citizens Savings Scheme, Sukanya Samriddhi Yojana, tax-saving fixed deposits, Infrastructure Bonds, Children's Tuition Fee Payment. One can save a maximum of Rs. 150,000 under section 80C to reduce the taxable income.

80CCD: Government Pension Schemes like NPS, Section 80CCD allows you to invest Rs 50,000. This deduction under 80CCD comes under the overall umbrella of section 80C with a maximum cap of Rs. 150,000 in a financial year.

80E: An assessee who has taken an education loan for higher education can avail of the tax deduction on interest repaid without any upper limit on the deduction amount. The benefit of the deduction is available for a maximum of 8 years or till the interest is paid.

80EEB: Interest deduction on the purchase of an electric vehicle for personal or business use. Rs 1,50,000 is allowed for an individual taxpayer towards deduction for interest repayment.

80D: Health insurance premium for self, spouse, children & dependent parents. Individuals can claim Rs 25,000 for self, family and another Rs 50,000 for senior citizen parents. If the assessee is above 60 years, the maximum allowable deduction under section 80D is Rs 1,00,000.

80G: Donations to prescribed NGOs and Charitable Institutions. However, donations made in cash exceeding Rs 2,000 will get disqualified. The upper limit on contribution depends on the entity to which the individual is donating. The gross qualifying amount of donation under 80G is subject to a maximum limit of 10 per cent of the total gross income.

80GG: A self-employed or salaried assessee can claim rent deduction up to Rs 60,000 per month if income does not include the House Rent Allowance component. The lowest amount of the below conditions will be allowed as the deduction under section 80GG.

i) Rs 5,000 per month

ii) Actual rent less 10 per cent of Income

iii) 25 per cent of the total income (Income excluding capital gains and before deductions under 80C to 80U.)

You can take help from an income tax professional, CA, investment advisor and make an informed decision and invest before 31st March 2022. If you are an employee, try submitting the receipts and proof of investments to the HR or Finance department. Else, you can consider these tax investments in your income tax return to get a refund. Do not neglect or ignore it because it will impact your tax liability and net income

Sunil Dhavala
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