Filing income tax returns? Here is how you can maximise your claims
The government has extended the deadline for filing income tax returns to June 30, in the wake of the ongoing coronavirus outbreak. If you are filing income tax returns in the coming days, you should look to maximise returns by availing benefits under different sections of the income tax.
The government has extended the deadline for filing income tax returns to June 30, in the wake of the ongoing coronavirus outbreak. If you are filing income tax returns in the coming days, you should look to maximise returns by availing benefits under different sections of the income tax. The biggest benefit comes under Section 80C which allows taxpayers to claim up to Rs 1.5 lakh.
But, what if your income is more and the limit doesn’t allow you to save enough? How do you maximise the claims than? Well, NPS or National Pension System emerges as the best possible option.
What is NPS?
An NPS account holder can claim up to Rs 50,000 income tax benefit in a financial year on his or her investment in the NPS account Tier-I under Section 80 CCD (1B). This income tax benefit is additional to Section 80C of the Income Tax Act 1961.
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An NPS account holder can claim 10 per cent Income Tax exemption under Section 80CCD on gross income with a limit up to Rs 1.5 lakh in a year. If the NPS subscriber is self-employed, then he or she can claim a 20 per cent income tax exemption on gross income.
What is the benefit?
Section 80C allows up to Rs 1.5 lakh income tax exemption in a financial year. If an income tax payer includes Section 80CCD (1B), this annual limit can be raised up to Rs 2 lakh. So, you end up claiming Rs 50,000 extra.
In case of a government employee (except Armed Forces) who joined services after 1st January 2004 and voluntary in case of those working in private sector, there is an additional deduction of up to 10 per cent of salary (basic + DA) irrespective of any limit qualifies for income tax deduction under Section 80 CCD(2). This is an additional benefit to save income taxes over and above the limit of Rs 2 lakh as mentioned earlier.
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