Tax Benefits You Might Be Missing During Income Tax Filing in India

Filing your Income Tax Return (ITR) can often feel like a tedious, confusing task, especially when it comes to finding all the deductions and benefits you're eligible for. Most of us end up filing our ITR just to get it over with, without fully taking advantage of the tax-saving options available to us. Unfortunately, this can result in missed opportunities to reduce your taxable income and save more money.

It’s important to know that most tax-saving deductions apply only if you opt for the old tax regime. The new tax regime offers lower tax rates but very limited deductions, which means fewer ways to reduce your taxable income. In this blog, we’ll walk you through some of the most commonly missed tax benefits available under the old tax regime, so you can make the most of your return and avoid common filing mistakes.

Claiming Deductions Under Section 80C

One of the most commonly missed deductions is under Section 80C of the Income Tax Act. This section allows you to deduct up to ₹1.5 lakh from your taxable income. However, many people are unaware of the various options available to them under 80C. This includes:

• Employee Provident Fund (EPF): If you're working in a company that deducts EPF, this contribution counts towards your ₹1.5 lakh limit.
• Public Provident Fund (PPF): Contributions to PPF accounts are eligible for deductions.
• National Savings Certificates (NSC): Investments made in NSC also qualify for 80C deductions.
• Life Insurance Premiums: Any premiums you pay towards life insurance policies (for yourself, your spouse, or children) are eligible for deductions.

Make sure you are factoring in all eligible expenses when doing your income tax filing. If you are near the ₹1.5 lakh limit, double-check your contributions in EPF, PPF, and other investments.

Interest on Home Loan (Section 24(b))

Homeowners often overlook the benefits they can claim on home loan interest. Under Section 24(b), you can claim a deduction of up to ₹2 lakh on the interest paid on home loans for the purchase, construction, or renovation of your home.

If you’ve been paying interest on a home loan, make sure you include this while filing your income tax return. A huge chunk of your home loan repayment goes towards interest, so this could be a significant tax benefit you’re missing out on.

Tax Benefits on Health Insurance (Section 80D)

Health insurance is one of those essential expenses that can help you claim valuable deductions. Under Section 80D, you can claim:

• ₹25,000 for health insurance premiums paid for yourself, your spouse, children, and parents (under 60 years of age).
• ₹50,000 if the insurance is for senior citizens (above 60 years of age).

Health insurance premiums might not seem like a major expense, but adding this to your income tax filing can offer good savings, especially if you're paying premiums for family members or senior parents.

Education Loan Deductions (Section 80E)

If you’ve taken an education loan for yourself or your relatives, you can claim a deduction under Section 80E. This deduction is available for the interest paid on the loan, and there is no upper limit on the amount. The benefit is available for up to 8 years from the year you start paying the loan interest.

If you’ve taken a loan for further studies or your children's education, don’t forget to claim this benefit while filing your income tax return.

Tax Benefits on Donations (Section 80G)

Another tax benefit that is often missed is the deduction under Section 80G for donations made to charitable organizations. You can claim deductions of up to 100% or 50% of the amount donated, depending on the charity. Some donations even offer deductions without any qualifying limits.

It’s a good idea to keep a record of the donations you’ve made during the financial year and include them when you’re completing your income tax filing. Not only will this reduce your taxable income, but you will also be contributing to a good cause.

Claiming HRA Exemption (House Rent Allowance)

If you're living in a rented house and receiving House Rent Allowance (HRA) from your employer, you could be eligible for tax exemptions. The HRA exemption depends on factors like your salary, the rent you pay, and the city you live in. It’s a great opportunity to reduce your taxable income if you meet the criteria.

Make sure to properly fill out the details of your rent payments and ensure that your landlord's PAN number is included in your income tax return filing. This will help ensure that you claim the maximum possible deduction.

Exemptions for Disabled Individuals (Section 80U)

If you or a family member has a disability, you can claim a deduction under Section 80U for a disability-related expenditure. A deduction of up to ₹75,000 is available, and for severe disabilities, the amount can go up to ₹1.25 lakh.

This benefit is underutilized by many taxpayers, so make sure to include it if applicable when filing your income tax return.

Leave Travel Allowance (LTA)

If you’ve traveled within India and received Leave Travel Allowance (LTA) as part of your salary, you can claim a tax exemption for it. LTA is only eligible for domestic travel, and the claim can be made for travel expenses for you and your family.

Remember, LTA can only be claimed for travel expenses, so ensure your travel receipts are ready for submission when filing your tax return.

What About the New Tax Regime?

Under the new tax regime, income tax rates are lower, but most deductions and exemptions are removed. It's ideal for individuals who don’t have many deductions or exemptions to claim.

Some key features:

• Simplified slab structure
• No deductions like 80C, 80D, HRA, LTA, etc.
• Some employer-related exemptions like NPS employer contribution still allowed

New Tax Regime: Income Tax Slabs for FY 2025–26 (AY 2026–27)

Key Updates:

• Standard Deduction: Increased to ₹75,000 for salaried individuals and pensioners under the new regime.
   
• Tax Rebate: Under Section 87A, individuals with a total income up to ₹12,00,000 are eligible for a rebate, effectively making their tax liability zero.
   
• Tax-Free Income Threshold: Considering the standard deduction and rebate, individuals earning up to ₹12,75,000 may have zero tax liability under the new regime. 

Don’t Miss Out on the Income Tax Filing Deadline

It’s easy to overlook some of these deductions during the year, but if you take the time to gather all the necessary documents and receipts before the income tax deadline, you can ensure that you make the most of these benefits. Filing your taxes early can also help you avoid the stress of last-minute tax return submission.

Maximize Your Tax Benefits with CreditInsta

Tax filing doesn’t have to feel like a headache, especially when you know exactly what you can claim. CreditInsta helps you make the most of your income tax filing by guiding you through eligible deductions, avoiding missed opportunities, and ensuring a smooth tax return submission. 

Not sure which section applies to you or how to claim it? CreditInsta’s got your back. Get started today and make your income tax filing smarter, faster, and stress-free with a team that knows taxes inside out.