Deductions should be claimed in the income tax return to reduce your taxable income and thereby your tax liability. Deductions are allowed for various expenses that you incur, such as:

• Investments: You can claim deductions for investments made in certain specified instruments, such as Public Provident Fund (PPF), National Savings Certificate (NSC), Equity Linked Saving Schemes (ELSS), and Unit Linked Insurance Plans (ULIPs).
• Medical expenses: You can claim deductions for medical expenses incurred for yourself, your spouse, children, and dependent parents.
• House rent allowance (HRA): If you are salaried and paying house rent, you can claim a deduction for HRA.
• Leave travel allowance (LTA): You can claim a deduction for LTA if you travel to your hometown or other places within India for leisure purposes.
• Education expenses: You can claim deductions for the education expenses of your children.
• Interest on education loan: You can claim deductions for the interest paid on an education loan taken for yourself or your children.

In addition to these general deductions, there are also a number of specific deductions that are available to certain categories of taxpayers, such as senior citizens, disabled taxpayers, and taxpayers who are engaged in certain businesses or professions.

To claim deductions in your income tax return, you will need to provide supporting documentation, such as investment statements, medical bills, and receipts for rent and travel expenses.

Here are some tips for claiming deductions in your income tax return:

• Keep good records of all your expenses. This will make it easier to claim deductions when you file your return.
• Be familiar with the different types of deductions that are available to you. You can find a list of all the deductions that are available in the Income Tax Act, 1961.
• If you are unsure about whether you are eligible to claim a particular deduction, consult with a tax professional.

By claiming all the eligible deductions in your income tax return, you can reduce your taxable income and thereby your tax liability.

Examples

• House rent allowance (HRA): If you are paying rent for your accommodation, you can claim a deduction for it up to a certain limit. The limit is 50% of your basic salary and dearness allowance (DA), or 25% of your total salary, whichever is higher.
• Leave travel allowance (LTA): If your employer gives you an LTA, you can claim a deduction for it up to a certain limit. The limit is twice the cost of airfare economy class for travel within India, or the cost of airfare economy class for international travel once in a block of four years.
• Medical expenses: You can claim a deduction for your medical expenses up to a certain limit. The limit for yourself, your spouse, and your dependent children is RS. 25,000. If your parents are senior citizens, you can claim a deduction for their medical expenses up to RS. 50,000.
• Life insurance premiums: You can claim a deduction for the life insurance premiums that you pay for yourself, your spouse, and your dependent children. The limit for this deduction is RS. 1.50 lakh.
• Public Provident Fund (PPF) contributions: You can claim a deduction for your PPF contributions up to a limit of RS. 1.50 lakh.
• National Savings Certificate (NSC) purchases: You can claim a deduction for your NSC purchases up to a limit of RS. 1.50 lakh.
• Education loan interest: If you have taken an education loan for yourself or your child, you can claim a deduction for the interest that you pay on the loan. There is no limit for this deduction.
• Charitable donations: You can claim a deduction for charitable donations that you make to approved charities. The limit for this deduction is 50% of your adjusted gross income.

In addition to the above deductions, there are a number of other deductions that you may be eligible for, depending on your individual circumstances. For example, if you are self-employed, you can claim deductions for your business expenses. If you have a disability, you can claim deductions for your disability-related expenses.

It is important to note that you can only claim deductions for expenses that are actually incurred and that are related to your income. You cannot claim deductions for personal expenses.

If you are unsure whether or not you are eligible for a particular deduction, you should consult with a tax professional.

Case laws

There are several case laws that have established the principle that deductions must be claimed in the return of income. Some of these case laws include:

• Jute Corporation of India Ltd. v. CIT (1979): The Supreme Court held that it is mandatory to claim a deduction in the return of income in order to avail it.
• Goetze (India) Ltd. v. CIT (1996): The Supreme Court reiterated that a deduction can only be claimed in the return of income, and that a revised return cannot be filed to claim a deduction that was not claimed in the original return.
• CIT v. Sangili Bank Ltd. (2020): The Bombay High Court held that a taxpayer cannot claim a deduction in the return of income if it was not claimed in the original return, even if the taxpayer has sufficient reasons to do so.

The rationale behind these case laws is that the income tax department needs to have a complete and accurate picture of the taxpayer’s income and expenses in order to assess the taxpayer’s tax liability. If taxpayers are allowed to claim deductions in revised returns, it would be difficult for the income tax department to verify the accuracy of the deductions and to prevent tax evasion.

There are a few exceptions to the general rule that deductions must be claimed in the return of income. For example, a taxpayer may be allowed to claim a deduction in a revised return if the taxpayer has a genuine reason for not claiming the deduction in the original return, such as if the taxpayer was unaware of the deduction at the time of filing the original return.

However, taxpayers should be aware that the income tax department is very strict about allowing deductions in revised returns. Taxpayers should therefore take care to claim all of their eligible deductions in their original return of income.

Conclusion

It is important to claim all of your eligible deductions in your original return of income. If you fail to claim a deduction in your original return, you may not be allowed to claim the deduction in a revised return, even if you have a genuine reason for not claiming the deduction in the original return

FAQ questions

Q: Why is it important to claim deductions in the return of income?

A: Claiming deductions in the return of income can help to reduce your taxable income and your tax liability. This means that you will keep more of your money.

Q: What types of deductions are available?

A: There are many different types of deductions available, including:

• Business expenses: If you are self-employed or own a business, you can deduct certain expenses related to your business, such as office rent, travel expenses, and salaries for employees.
• Investment expenses: You can deduct certain expenses related to your investments, such as investment fees and interest on investment loans.
• Personal expenses: You can deduct certain personal expenses, such as medical expenses, charitable donations, and interest on home loans.

Q: How do I claim deductions in my return of income?

A: To claim deductions in your return of income, you will need to provide documentation to support your claims. This documentation may include receipts, invoices, and bank statements.

Q: What are the consequences of not claiming deductions in my return of income?

A: If you do not claim deductions in your return of income, you will pay more tax than you need to. This is because you will be taxed on your full income, even though you may be eligible for deductions.

Q: Are there any time limits for claiming deductions in my return of income?

A: Yes, there are time limits for claiming deductions in your return of income. For example, you must claim medical expenses for the year in which you incurred them.

Conclusion

It is important to claim all of the deductions that you are eligible for in your return of income. By doing so, you can reduce your taxable income and your tax liability. If you have any questions about claiming deductions, you should consult with a tax professional