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ITR Filing 2024-25: Navigating Old Tax Regime Deductions Amidst Increased Scrutiny for AY 2025-26

The deadline for Income Tax Return (ITR) filing for the Assessment Year (AY) 2024-25 is fast approaching. While taxpayers have the option of choosing between the new and old tax regimes, many continue to opt for the old regime, leveraging its numerous deductions to minimize their tax liability. However, the Income Tax Department is sharpening its focus on scrutinizing ITRs claiming deductions under the old tax regime, particularly for AY 2025-26. This heightened scrutiny necessitates a thorough understanding of allowable deductions and meticulous documentation to avoid potential complications.

This article provides a comprehensive guide to claiming deductions under the old tax regime for your ITR filing, highlighting areas of potential scrutiny and offering best practices to ensure a smooth and compliant process.

Understanding the Old Tax Regime and its Deductions

The old tax regime offers various deductions under sections 80C, 80D, 80TTA, 80G, and others. These deductions help reduce your taxable income, ultimately leading to lower tax payments. However, claiming these deductions requires accurate record-keeping and proper documentation.

Key Deductions Under the Old Tax Regime:

• Section 80C: This section allows deductions for investments like Employee Provident Fund (EPF), Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), life insurance premiums, and home loan principal repayments. The maximum deduction limit is ₹1.5 lakh per financial year. Remember: Keep all investment and payment proof meticulously organized. Incomplete or missing documentation is a major reason for ITR scrutiny.

• Section 80D: This section covers medical insurance premiums paid for self, spouse, children, and parents. The deduction limits vary based on the age of the insured individuals. Pro Tip: Ensure your policy details, including the premium amount and payment proof, are readily available.

• Section 80TTA: This section allows a deduction of up to ₹10,000 for interest earned on savings bank accounts. Important Note: This deduction is applicable only if the interest income is below ₹10,000.

• Section 80G: This covers donations made to eligible charitable organizations. Essential Documentation: Obtain and retain the proper receipt from the charity, including the 80G registration number. Incorrectly claiming deductions under this section is a common cause for scrutiny.

• Section 80CCD(1B): This section allows an additional deduction of up to ₹50,000 for contributions to the National Pension System (NPS).

Increased Scrutiny for AY 2025-26: What to Expect

The Income Tax Department has indicated an increased focus on verifying the genuineness of deductions claimed under the old tax regime, especially for AY 2025-26. This increased scrutiny stems from instances of fraudulent claims and inaccurate reporting.

Areas of Focus for the Tax Department:

• High-value deductions: Claims for deductions near or at the maximum limit under Section 80C will be closely examined. Be prepared to justify your investments and demonstrate their legitimacy.

• Lack of supporting documents: Missing or incomplete documentation is a major red flag. The department may issue notices requesting further information, potentially leading to delays and penalties. Keyword: ITR filing penalties

• Inconsistent information: Discrepancies between the information provided in the ITR and the supporting documents will invite scrutiny.

• Unusual investment patterns: Sudden and significant increases in investments could trigger suspicion. Justify any changes in your investment patterns clearly.

Best Practices for ITR Filing under the Old Tax Regime

To avoid scrutiny and ensure a smooth filing process, follow these best practices:

• Maintain meticulous records: Keep all receipts, investment certificates, and bank statements related to your deductions organized and readily available. Keyword: Income Tax Return filing

• Double-check your calculations: Ensure all deductions are calculated accurately and within the prescribed limits.

• Utilize tax software: Tax software can help you accurately calculate your taxable income and file your ITR efficiently. Keyword: Best ITR software

• Consult a tax professional: If you are unsure about any aspect of claiming deductions, seek professional advice from a Chartered Accountant (CA) or tax consultant.

• File your ITR before the deadline: Avoid last-minute rush and potential errors. Keyword: ITR filing due date

The Bottom Line

While the old tax regime provides avenues for minimizing your tax liability, claiming deductions requires careful planning and accurate record-keeping. With the Income Tax Department intensifying its scrutiny for AY 2025-26, meticulous attention to detail is paramount. By adhering to best practices and ensuring all documentation is accurate and complete, taxpayers can significantly reduce the risk of facing scrutiny and ensure a compliant ITR filing. Remember, accurate and timely ITR filing is crucial for avoiding penalties and ensuring a smooth interaction with tax authorities. Prepare your documents thoroughly and consider seeking professional guidance if needed.