Get Ready to File Your Taxes: A Guide to the Key Sections of the Income Tax Act, 1961
2025 ITR Filing: Essential Insights Into Sections 80C, 80D, 24B, and More Key Tax Deductions
Ready to dive into the world of tax filing? As tax season approaches, it's essential to understand the nitty-gritty of the Income Tax Act, 1961, to ensure accurate calculations, claim deductions, and choose the most suitable tax regime.
Time to File Returns: Here's the Breakdown
The Income Tax Department has rolled out ITR-1 and ITR-4 forms for Assessment Year 2025-26. These forms cater to individuals and entities with an income of up to Rs 50 lakh, initiating the annual ITR filing process for Financial Year 2024-25.
Income Tax Returns 101: Everything You Need to Know
Mandatory Filing Under Section 139(1)
Section 139(1) of the Income Tax Act mandates individuals and entities who surpass the income threshold to submit their ITR within the allotted time frame. This section outlines provisions for both mandatory and voluntary return filing.
Saving Some Green: Deductions and Exemptions Under Key Sections
Investments in Tax-Saving Instruments (Section 80C)
Individuals opting for the older tax regime can enjoy deductions for investments in various tax-saving instruments such as Public Provident Fund (PPF), Employees' Provident Fund (EPF), Equity Linked Savings Scheme (ELSS), tax-saving fixed deposits, and life insurance premiums. The maximum deduction allowed under this section is Rs 1.5 lakh.
However, under the new tax regime, only Section 80C deductions for investments in National Pension Scheme (NPS) are available. Taxpayers get the chance to claim deductions up to 10% of the employer's NPS contribution. Other deductions like Section 80C for other investments are not valid under the new tax regime.
Home Loan Interest Payment (Section 24B)
Taxpayers who pay interest on home loans or home improvement loans can claim deductions under Section 24B. This deduction applies to both the old and new tax regimes, with a maximum deduction of up to Rs 2 lakh allowed for home loan interest payments.
House Rent Allowance (HRA) and Exemptions (Section 10(13A))
Residents living in rented properties can claim an exemption on House Rent Allowance (HRA) if their rent exceeds Rs 1 lakh annually. This exemption is covered under Section 10(13A) of the Income Tax Act, making it beneficial for eligible individuals.
Health Insurance Premiums (Section 80D)
Section 80D allows taxpayers to claim deductions for premiums paid on health insurance policies. The maximum deduction available is Rs 1 lakh annually, which can be claimed for coverage of the taxpayer, their spouse, children, and parents. For taxpayers below 60 years of age, the limit is Rs 25,000. However, for senior citizens (aged 60 and above), this limit is increased to Rs 50,000.
Penalty for Late Filing of ITR (Section 234F)
Section 234F imposes penalties for late filing of ITR. If the return is filed after the due date, a penalty of Rs 1,000 is applicable for those with income below Rs 5 lakh. For income exceeding Rs 5 lakh, the penalty increases to Rs 5,000. Delays in ITR filing can also lead to interest charges under Sections 234A and 234B, further boosting the taxpayer's liability.
Stay tuned for more updates on the tax filing process, and remember, the more prepared you are, the smoother the tax season will be!
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Enrichment Data:
The changes in the ITR-1 (Sahaj) form for Assessment Year 2025-26 include:
- ** Simplified filing for LTCG under Section 112A Taxpayers with long-term capital gains (LTCG)** up to Rs 1.25 lakh from listed equity shares, equity mutual funds, or business trusts (under Section 112A) can now file using ITR-1 instead of ITR-2 or ITR-3, even if the gains are exempt.
- New section for exempt LTCG income ITR-1 now includes a dedicated section titled "Income on which no tax is payable: Long Term capital gains u/s 112A not chargeable to Income-tax" to explicitly report exempt gains.
- Enhanced deduction disclosures
- Drop-down menus for deductions under Sections 80C, 80D, 80G, and 80GG to standardize claims.
- Section-wise TDS details for improved transparency in tax credit reconciliation.
- Eligibility criteria modification ITR-1 remains restricted to residents with total income up to Rs 50 lakh, excluding income from business/profession, agricultural income over Rs 5,000, or capital gains exceeding Rs 1.25 lakh (except LTCG under Section 112A).
- Prepare for navigating tax obligations by understanding the Income Tax Act, 1961, especially when it comes to the 2025-26 Assessment Year, where individuals and entities with an income of up to Rs 50 lakh can file using ITR-1 or ITR-4 forms.
- Section 139(1) mandates individuals and entities surpassing the income threshold to submit their ITR within the specified time frame, outlining provisions for both mandatory and voluntary return filing.
- Investments in tax-saving instruments such as Public Provident Fund (PPF), Employees' Provident Fund (EPF), Equity Linked Savings Scheme (ELSS), tax-saving fixed deposits, and life insurance premiums can save you up to Rs 1.5 lakh under Section 80C deductions in the older tax regime.
- In the new tax regime, only Section 80C deductions for investments in National Pension Scheme (NPS) are available, with a chance to claim deductions up to 10% of the employer's NPS contribution.
- Penalties for late filing of ITR under Section 234F could result in a Rs 1,000 fine for those with income below Rs 5 lakh, while those with income exceeding Rs 5 lakh may face a Rs 5,000 penalty.
