ITR Filing & Deductions: Maximizing Tax Savings for FY 2024-25
Filing Income Tax Returns (ITR) is an essential responsibility for every taxpayer in India. It ensures compliance with tax regulations and allows individuals to claim deductions and rebates that help reduce their taxable income. The tax laws provide multiple deductions under different sections, which can significantly lower tax liability when used effectively.
Understanding these deductions and filing ITR correctly can lead to better financial planning and savings. However, it is crucial to note that deductions are available only under the old tax regime. The new tax regime offers lower tax rates but removes most exemptions and deductions.
Table of Contents
Understanding ITR Filing
ITR filing is the process through which individuals, businesses, and organizations report their income, deductions, and tax payments to the Income Tax Department. While filing ITR is mandatory for individuals earning above a specified threshold, those below the exemption limit should also consider filing, as it serves as financial proof for loans, visas, and investments.
Who Needs to File an ITR?
Salaried individuals earning more than ₹2.5 lakh per year (₹3 lakh for senior citizens and ₹5 lakh for super senior citizens).
Self-employed professionals and business owners, irrespective of income levels.
Individuals with foreign income or assets, including NRIs with taxable earnings in India.
Investors with significant capital gains from stocks, mutual funds, or real estate transactions.
Anyone seeking a refund on TDS deducted from salary, interest income, or freelance earnings.
Individuals making high-value transactions, such as property purchases exceeding ₹30 lakh or spending over ₹2 lakh on foreign travel.
Even if not mandatory, filing an ITR is beneficial for maintaining a clean financial record.
Types of ITR Forms
The Income Tax Department provides different ITR forms based on income sources and taxpayer categories:
ITR-1 (Sahaj) – For salaried individuals with total income up to ₹50 lakh and one house property.
ITR-2 – For individuals with capital gains, rental properties, or foreign assets.
ITR-3 – For individuals with business income, including freelancers.
ITR-4 (Sugam) – For small businesses and professionals under the presumptive taxation scheme.
ITR-5 to ITR-7 – For partnerships, companies, and trusts.
Choosing the wrong form can lead to rejection or delays in processing.
Documents Required for ITR Filing
To ensure a smooth filing experience, gather the following documents:
Form 16 – Salary and TDS details from the employer.
Form 26AS & AIS – Tax credit statement from the Income Tax Department.
Bank statements – To track interest income and high-value transactions.
Investment proofs – Required to claim deductions under the old tax regime (EPF, PPF, ELSS, life insurance, etc.).
Loan repayment certificates – For home loan (80C, 80EE) and education loan (80E) deductions.
Capital gains statements – For stock market transactions or property sales.
Maintaining digital copies can help avoid tax scrutiny.
How to File an ITR Online
The Income Tax Department’s e-filing portal simplifies the process. Follow these steps:
Register/Login – Visit incometax.gov.in and log in with PAN details.
Select the Correct ITR Form – Based on your income type.
Enter Income Details – Fill in salary, business income, rental income, and capital gains.
Claim Deductions (Only in Old Regime) – Enter eligible deductions under 80C (investments), 80D (health insurance), and 80G (donations).
Compute Tax Liability – The system will calculate tax based on your regime choice.
Pay Additional Tax (If Required) – If tax dues exist after TDS, pay online.
Submit & Verify – Use Aadhaar OTP, net banking, or a physical signed form to verify your return.
Filing on time avoids penalties and speeds up refund processing.
Key Deductions to Lower Tax Liability (Only Under the Old Tax Regime)
The old tax regime allows multiple deductions to reduce taxable income. These deductions are not available under the new tax regime.
Section 80C – Investments & Payments (Limit: ₹1.5 Lakh)
Eligible investments include:
EPF & PPF
National Savings Certificate (NSC)
Equity-Linked Savings Scheme (ELSS)
Life insurance premiums
Children’s tuition fees
Home loan principal repayment
Section 80D – Health Insurance Premium
₹25,000 deduction for individuals and ₹50,000 for senior citizens.
Includes family health insurance and preventive checkups.
Section 80E – Education Loan Interest
Full deduction on interest paid for education loans (no upper limit).
Section 80EE & 80EEA – Home Loan Interest
Additional deductions of ₹50,000 (80EE) and ₹1.5 lakh (80EEA) for first-time homebuyers.
Section 80G – Donations to Charity
50% to 100% deduction for donations to eligible charities and relief funds.
Section 80TTA & 80TTB – Interest on Savings & Deposits
₹10,000 exemption (80TTA) for savings account interest.
₹50,000 exemption (80TTB) for senior citizens on FD and savings interest.
Choosing Between Old and New Tax Regimes
The old tax regime allows deductions but has higher tax rates, while the new regime offers lower rates but no deductions.
Feature | Old Tax Regime | New Tax Regime |
Deductions Allowed | Yes (80C, 80D, etc.) | No |
Standard Deduction | ₹50,000 | ₹75,000 (from FY 2024-25) |
Tax Slabs | Higher | Lower |
Best for | Those with deductions | Those without deductions |
Evaluate your income structure, deductions, and tax liability before choosing a regime.
Common Errors to Avoid While Filing ITR
Selecting the wrong ITR form.
Failing to reconcile Form 26AS & AIS before filing.
Claiming deductions under the new regime (not allowed).
Not verifying ITR after submission.
Ignoring tax credits and eligible refunds.
Conclusion
Filing ITR correctly and selecting the right tax regime ensures compliance and maximizes savings. The old tax regime is beneficial for those using deductions, while the new regime is better for those preferring lower tax rates without exemptions. Careful assessment can help taxpayers make the most tax-efficient choice.
FAQs
1. What is the last date to file ITR for FY 2024-25?
The last date to file ITR without a late fee is July 31, 2025. For taxpayers requiring audits, the deadline is October 31, 2025.
2. What happens if I miss the ITR filing deadline?
If you miss the deadline, you can file a belated ITR until December 31, 2025, but a late fee of up to ₹5,000 will apply. You may also lose eligibility for certain deductions and refunds.
3. Can I claim tax deductions under the new tax regime?
No, most deductions (like 80C, 80D, and 80E) are not available under the new tax regime. However, a standard deduction of ₹75,000 (for FY 2024-25) is applicable.
4. How do I know which ITR form to use?
Your ITR form depends on your income sources:
ITR-1 (Sahaj): Salaried individuals with one house property.
ITR-2: Individuals with capital gains, multiple properties, or foreign income.
ITR-3: Business owners and professionals.
ITR-4: Small businesses under the presumptive taxation scheme.
5. Can I file ITR if my income is below the taxable limit?
Yes, even if your income is below ₹2.5 lakh, filing ITR can be beneficial for claiming refunds, maintaining financial proof for loans, and ensuring a good tax record.
6. How can I check my ITR refund status?
You can check your refund status by logging into the Income Tax e-Filing portal and exploring the 'Refund Status' section.
7. Can I revise my ITR after filing?
Yes, if you made an error in your original ITR, you can file a revised return before December 31, 2025.
8. What are the penalties for incorrect ITR filing?
Filing incorrect ITRs may lead to notices from the IT department. Severe discrepancies can result in penalties ranging from 50% to 200% of tax evaded, or even prosecution in cases of fraud.
9. How do I claim HRA (House Rent Allowance) in my ITR?
HRA can only be claimed under the old tax regime. You need to submit rent receipts and declare the amount under Section 10(13A).
10. Can I switch between the old and new tax regimes every year?
Yes, salaried individuals can switch tax regimes every year while filing ITR. However, business owners opting for the new tax regime must continue with it unless they meet specific conditions.
11. How do I avoid mistakes while filing my ITR?
Verify Form 26AS & AIS for correct tax details.
Select the right ITR form.
Claim only eligible deductions.
E-verify your return to complete the process.
12. How long does it take to process an ITR refund?
ITR refunds are typically processed within 30-45 days after successful e-verification. Ensure correct bank details are provided for faster refunds.
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