ITR Filing: As soon as the new financial year starts, correct tax planning becomes necessary for taxpayers. Let us know 5 important income tax rules, which can help in reducing your tax liability.
ITR Filing 2025: The new financial year i.e. 2025-26 has started. This is the time for taxpayers not only to file income tax returns (ITR) but also to do the right tax planning. There are many important sections of the Income Tax Act, 1961, which can reduce your tax liability if understood properly. Also, it can save you from future problems.
We are telling you about five such income tax provisions (Sections), which are important for every taxpayer to know:
1. Section 80C: Tax exemption up to ₹ 1.5 lakh
Section 80C of Income Tax is the most popular tax saving option. Under this, taxpayers can get a maximum exemption of ₹ 1.5 lakh annually. However, for this, investments have to be made in certain specific schemes. Such as Sukanya Samriddhi Yojana, 5-year tax saving FD, life insurance premium, PPF, EPF and ELSS etc.
Apart from this, children’s school fees and payment of principal amount of home loan are also included in this. However, you should keep in mind that tax exemption of ₹ 1.5 lakh is available by combining all investments. It is not that you will get tax exemption up to ₹ 1.5 lakh on every investment.
2. Section 24 (b): Exemption of interest on home loan
If a person has taken a home loan and he himself lives in that house, then he can get tax exemption on interest up to ₹ 2 lakh annually. If the property is given on rent, then the entire interest amount can be claimed. However, the limit of set-off from other income is only ₹ 2 lakh.
For example, you paid interest of ₹5 lakh on a home loan in a year. But, you got rent of only ₹2 lakh. This means that you suffered a loss of ₹3 lakh. In such a situation, you can set-off the loss of ₹2 lakh from your other income, such as salary or business. The remaining loss of ₹1 lakh will be carried forward for the next 8 years.
3. Section 10(14): HRA exemption for rented houses
If you work in a company and live in a rented house, then the House Rent Allowance (HRA) you get can help you save tax. For this, tax exemption is given under Section 10(14) of Income Tax, but with some rules. The exemption you get is given on the lowest of the three amounts:
Actual HRA received (as shown in your salary slip)
50% of salary in metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% in non-metro cities
Rent – 10% of basic salary
These three will be calculated for exemption and the lowest amount will be considered as tax exemption. If the annual rent is more than ₹ 1 lakh, then it is necessary to provide the PAN of the landlord.
4. Section 80D: Deduction on health insurance
Section 80D of Income Tax is very important, which allows taxpayers to get exemption on health insurance premium. Under this, the taxpayer can claim tax exemption of up to ₹ 25,000 for himself, spouse and children. If the parents are senior citizens (60 years or above), then an additional exemption of ₹ 50,000 is available.
Thus, the total maximum exemption can be from ₹ 75,000 to ₹ 1 lakh. This can also include the amount of preventive health checkup up to ₹ 5,000, which is counted in the total limit.
5. Section 234F: Heavy penalty for late filing of ITR
Finance is imposed under section 234F for not filing Income Tax Return (ITR) on time. If your income is less than ₹ 5 lakh, then a penalty of ₹ 1,000 can be imposed, and a penalty of ₹ 5,000 can be imposed if your income is more than ₹ 5 lakh.
Apart from this, repeated delays may also lead to interest and other penalties under sections 234A and 234B. Also, refund and carry forward benefits may be lost.
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