Top 10 List of Income Tax Deductions for AY 2021-22 for Salaried Employees: Tax Benefits on Payments, Investments and Incomes

by Joseph K. Clark

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Income Tax Deductions for AY 2021-22: The 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, because of the second wave of the Covid-19 pandemic and the subsequent difficulties taxpayers face. As you now have more time to file tax returns, look at the following list of tax deductions you can claim on various payments, incomes, and investments.

You can only claim the following deductions in the current assessment year 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 and improvement loansn is allowed. According to the Income Tax Rules, the upper limit for deduction of interest paid on housing loans is Rs 2 lakh for 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.

Income Tax

Also, Read | All Income Tax due dates end on July 2. Payments for LIC premiums, provident fund, PPF, and Pension schemes

  • Under Section 80C, the 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, a deduction can be claimed towards payments made to an annuity plan of LIC or another insurer towards the pension scheme.
  • Under Section 80 CCD (1), deduction towards payments made to the pension scheme of the Central Government can be claimed.

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

3. Payments for the 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:

  • If the employer is a PSU, State Government, or others, the deduction limit is 10 percent of the salary.
  • If the employer is Central Government, the deduction limit is 14 percent of wages.

Also READ | Income Tax Return filing: 5 benefits of filing ITR even if your income is not taxable

4. Payment for health insurance premium

Under Section 80 D, deductions towards health insurance premiums and preventive health checkups can be claimed. However, there are various limits:

  • For Self/Spouse or Dependent Children or Patents: A 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, a 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 instead of payments made for care or medical treatment of a disabled dependent or paid/deposited any amount under a relevant approved scheme. However, for 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 a specified disease. This deduction limit is Rs 1 lakh if the person is a senior citizen.

7. Education loan interest payment

Under Section 80E, a deduction of the total amount paid towards interest payments on higher education loans 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 to acquire a residential house property. However, this deduction is available only for loans sanctioned between April 1, 2016, and March 31, 2017.

Under 80EEA, a deduction up to Rs 1.5 lakh deduction towards interest payments made on a loan taken for the acquisition of residential house property for the first time where the loan is sanctioned between April 1, 2019, to March 31, 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 a loan to purchase an electric vehicle. This is available only for loans sanctioned between April 1, 2019, to March 31, 2023.

10. House rent payment for those not getting HRA

If HRA is not part of your salary, a 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 percent of total income before deduction
  • Rs 5,000 per month
  • 25 percent of total income before this deduction

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

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