Every year during the income tax return filing season, thousands of taxpayers make genuine efforts to optimise their returns by claiming deductions under various sections of the Income Tax Act. But a recent release by the Income Tax Department flagged and brought a fresh warning, stating that several of these deductions, particularly under Sections 10(13A), 80GGC, 80E, 80D, 80EE, 80EEB, 80G, 80GGA and 80DDB, are being wrongly or falsely claimed.
If you are planning to claim any of these, know this: eligibility alone is not enough. The department is increasingly relying on data-matching, and deductions that are not backed by the right documentation or do not align with your Annual Information Statement (AIS) are likely to be picked up for scrutiny.
Here is a breakdown of what each of these sections offers and what you must keep in mind before filing:
Section 10(13A) for House Rent Allowance (HRA)
This is one of the most commonly claimed exemptions by salaried employees. But the claim is valid only if you pay actual rent and have the documents to prove it.
To claim this deduction taxpayers would typically need three key documents, namely rent receipts, a valid rental agreement, and landlord's PAN if annual rent exceeds Rs 1 lakh.
However, it is important that taxpayers avoid any fictitious HRA claims since these are among the deductions that are coming under income tax scrutiny.
Section 80G for Donations to Charitable Institutions
Only donations to registered entities qualify for deduction. Also, cash donations above Rs 2,000 are not allowed.
You will require the following documentation for this claim:
Donation receipt showing the donee's name, PAN, and 80G registration number
Mode of payment (must be through a bank beyond Rs 2,000)
Ensure the donation appears in Form 10BE issued by the donee institution
You should always cross-check the donee's legitimacy here.
Section 80GGC for Donations to Political Parties
You can claim a deduction under this section for contributions to registered political parties, but not in cash. Payment must be made via banking channels.
You'll need to ensure:
Donation acknowledgement from the political party
Proper payment proof
That the party is registered, verify using the ECI website
Section 80GGA for Donations for Rural Development or Scientific Research
Like 80G, these donations require that the recipient entity be eligible and registered. Documents should include:
Valid donation receipt with registration details
Non-cash payment reference
Confirmation that the entity is listed under 80GGA
Section 80E for Interest on Higher Education Loan
This is meant for individuals paying interest on education loans. But again, you need to prove that the loan was for higher studies.
You will have to keep ready:
Loan sanction letter
Interest certificate from the lender
Also, confirm that the loan is from a recognised financial institution
Section 80EE for Home Loan Interest (First-Time Buyers)
If you are a first-time homebuyer, this section gives you additional benefits beyond Section 24 of the Income Tax Act, 1961.
To claim it, make sure the property value and the loan fall within the specified limits and:
Keep loan sanction documents and interest certificates
Self-declaration that you don't own any other property
Section 80EEB for Interest on Loan for Electric Vehicles
This deduction is only applicable only if your EV loan was sanctioned between April 1, 2019 and March 31, 2023.
You will need:
Interest certificate from the lender
Loan sanction letter with date
Section 80D for Medical Insurance Premium
This is one deduction where many go wrong, particularly when combining multiple policies or failing to keep receipts.
It is important to remember that premiums must be paid via non-cash modes (except up to Rs 5,000 for preventive check-ups).
Documents required: insurance policy, premium payment proof, and the name of insured persons
Section 80DDB for Medical Expenses for Specified Diseases
This deduction is a tricky one, as it is claimable only when treatment is for listed diseases and meets several conditions.
You will need the following documents to claim it:
Certificate from a specialist doctor from a government hospital (Form 10I)
Bills and payment proof
Deduction limits vary by the age of the patient
Taxpayers Should Keep This In Mind
As you sit to file your income tax return, always match your deduction claims with the AIS and Form 26AS because discrepancies can trigger notices.
Additionally, you should also avoid claim duplication, for instance, claiming both HRA and home loan deductions without appropriate justification could trigger scrutiny.
Recently, claims not supported by Form 10BE (for donations) or bank records (for cashless payments) are increasingly getting auto-flagged by the system.
Lastly, experts say that wherever possible, use online modes for payment as it creates a verifiable trail that helps during assessment.
In short, if you are claiming a deduction, be ready to prove it should a scrutiny arise. Taxpayers often lose benefits not because the claims are invalid, but because documentation is poor or missing. With the I-T department stepping up verification, keeping your records in order is more important than ever.
