The last date for taxpayers to file income tax returns (ITR) is now near. If you have not filed your return yet, then complete this work as soon as possible; otherwise, you may have to face a penalty. While filing ITR, it is very important to know about the deductions available to reduce your tax amount. In this article, we are telling you about the important deductions available under both the new and old tax regimes so that you can avail maximum benefits.
Key deductions available in the old tax system
In the old tax system, taxpayers got the benefit of many types of deductions, which reduced the total taxable income.
Deduction of interest on home loan
You can claim interest up to ₹ 2 lakh on the home loan taken on your property. This facility is available to you under Section 24(b).
Section 80C, 80CCC and 80CCD (1)
You can avail a deduction of up to ₹1,50,000 under these sections. These include investments like life insurance premiums, PPF, ELSS, and children’s tuition fees.
Contribution to pension scheme
Under Section 80CCD, you can claim an additional deduction of up to ₹50,000 for contributions to a pension scheme.
Health insurance and medical check-up
As per Section 80D, you can claim a deduction of up to ₹25,000 on health insurance for yourself, your wife, and your children. For parents, this limit is ₹25,000. Also, a deduction of up to ₹5,000 is available on a health check-up.
Treatment of illness
Under Section 80DDB, you can claim a deduction for the treatment of illness of yourself or dependents. The limit is up to ₹40,000 for your own illness and ₹1,00,000 for senior citizens.
Electric vehicle loan
If you have purchased an electric vehicle and are repaying a loan for it, you can claim a deduction of up to ₹1,50,000 on the interest paid under Section 80EEB.
House rent
As per the Income Tax Act, 1961, if you do not get HRA from the company, you can claim a deduction on the rent paid.
Savings account interest
You can claim a deduction of up to ₹10,000 for interest earned from savings accounts.
Major deductions available in the new tax system
The new tax system may have fewer deductions, but it has lower tax rates, giving taxpayers another option.
Tax Rebate
For the financial year 2024-25, you can avail a rebate of up to ₹25,000 as per Section 87A on taxable income up to ₹7 lakh.
Standard Deduction
Salaried persons also get a standard deduction of ₹75,000 in the new tax system.
It is important to understand which tax regime you should choose. If you can avail more deductions, the old regime may be beneficial for you, while the new regime with fewer deductions and lower tax rates is a good option. Make a well-informed decision and file your ITR on time.