Salaried employee? These payments, investments and incomes will give you tax benefits in 2021 (Top 10 List)

  • July 17, 2021
  • CA Chandan Agarwal's Office

Top 10 List of Income Tax Deductions for AY 2021-22: You can claim the following deductions in the current assessment year only on payments and investments made in the previous financial year (FY 2020-21).

Income Tax Deductions for AY 2021-22: The Income Tax Return (ITR) filing season has started. The Central Government recently increased the deadline for ITR filing for the assessment year 2021-22 from July 31 to September 30, 2021, in view of the second wave of Covid-19 pandemic and the subsequent difficulties faced by taxpayers. As you now have more time in hand to file tax returns, take a look at the following list of tax deductions you can claim on various payments, incomes and investments.

You can claim the following deductions in the current assessment year only on payments and investments made in the previous financial year (FY 2020-21). Also, these deductions will not be available for those who opted for the New Tax Regime.

1. Income from House Property

Under Section 24(b), deduction from income from House Property on interest paid on housing loan and housing improvement loan is allowed. According to the Income Tax Rules, the upper limit for deduction of interest paid on housing loans is Rs 2 lakh in the case of a self-occupied property.

For those who have opted to file returns under the New Tax Regime, this deduction from income from house property will not be available from this year.

2. Payments for LIC premium, provident fund, PPF, Pension schemes

  • Under Section 80C, deduction can be claimed on investment/payment for Life Insurance Premium, Provident Fund, PPF, Subscription to certain equity shares, Tuition Fees, National Savings Certificate, Housing Loan Principal etc.
  • Under Section 80CCC, deduction towards payments made to annuity plan of LIC or other insurer towards the pension scheme can be claimed.
  • Under Section 80 CCD (1), deduction towards payments made to pension scheme of the Central Government can be claimed.

Note: The total combined deduction of only Rs 1.5 lakh under Section 80C, Section 80CCC, Section 80 CCD (1) can be claimed.

3. Payments for Central Government Pension scheme

Under Section 80 CCD (1B), a deduction up to Rs 50,000 towards payments made to the Pension Scheme of the Central Government, excluding deduction claimed under 80CCD (1) can be claimed.

Under Section 80 CCD2, a deduction towards contribution made by an employer to the pension scheme of the Central Government can be claimed. However, there are two conditions:

  • In case the employer is a PSU, state Government or others, the deduction limit is 10 per cent of salary.
  • In case the employer is Central Government, the deduction limit is 14 per cent of salary.

    4. Payment for health insurance premium

    Under Section 80 D, deduction towards payments made towards health insurance premiums and preventive health check-up can be claimed. However, there are various limits:

    • For Self/Spouse or Dependent Children or patents: Deduction of Rs 25,000 can be claimed. This limit is Rs 50,000 in case any person is a senior citizen. Also, Rs 5000 deduction for preventive health checkups is allowed. However, this amount is not above the overall ceiling of the health insurance premium paid.
    • Even if no premium is paid on health insurance coverage, deduction towards medical expenditure incurred on a senior citizen can be claimed. The deduction limit, in this case, is Rs 50,000.

      5. Payment for maintenance/treatment of disabled dependent

      Also, a deduction up to Rs 75,000 can be claimed in lieu of payments made for maintenance or medical treatment of a disabled dependent or paid/deposited any amount under a relevant approved scheme. However, in the case of persons with severe disability (80$ or more), the deduction limit is Rs 1.25 lakh.

      6. Payment for medical treatment

      Under Section 80 DD (1B), a deduction up to Rs 40,000 can be claimed for payments made towards medical treatment of self or dependent for specified disease. This deduction limit is Rs 1 lakh in case the person is a senior citizen.

      7. Education loan interest payment

      Under Section 80E, deduction of total amount paid towards interest payments higher education loan of self or relative can be made.

      8. Home loan interest payment

      Under Section 80EE, a deduction up to Rs 50,000 can be claimed towards interest payment made against the loan taken for the acquisition of a residential house property. However, this deduction is available only for loans sanctioned between 1st April 2016 to 31st March 2017.

      Under 80EEA, a deduction up to Rs 1.5 lakh deduction towards interest payments made on loan taken for acquisition of residential house property for the first time where the loan is sanctioned between 1st April 2019 to 31st March 2022 & deduction should not have been claimed u/s 80EE

      9. Electric vehicle loan interest payment

      Under Section 80EEB, a deduction up to Rs 1.5 lakh can be claimed on interest payments of loan for the purchase of an electric vehicle. This is available only for loan sanctioned between 1st April 2019 to 31st March 2023.

      10. House rent payment for those not getting HRA

      If HRA is not a part of your salary, deduction towards rent paid for a house can be claimed under Section 80 GG. However, only the least of the following is allowed as a deduction:

      • Rent paid reduced by 10 per cent of total income before deduction
      • Rs 5,000 per month
      • 25 per cent of total income before this deduction

      The due date for filing ITR for the assessment year 2021-22 is September 30, 2021.

      Source: https://www.financialexpress.com/money/income-tax/top-10-list-of-income-tax-deductions-for-ay-2021-22-for-salaried-employees-tax-benefits-on-payments-investments-and-incomes/2291512/

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