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Income Tax – Submit details of Section 80C investments early to reduce TDS

When filing Income Tax Return (for FY 2020-21), you have to calculate tax by adding up income from all sources and subtracting deductions under Section 80C/ 80D/ standard deduction, etc.


I am a first-time taxpayer with annual income of Rs 8 lakh. My employer deducts TDS of Rs 4,000 every month. How do I claim benefits under Section 80C for PPF, NPS etc?

—Deepak Kumar

TDS is a ‘pay as you earn’ measure and is only provisional tax. The final tax liability is determined at the end of the financial year. When filing Income Tax Return (for FY 2020-21), you have to calculate tax by adding up income from all sources and subtracting deductions under Section 80C/ 80D/ standard deduction, etc.

The TDS deducted by your employer (as reflected in Form 26AS) can then be claimed as credit in the ITR form. Any excess of TDS paid over the final tax liability shall be refunded. However, if you furnish the details of any tax-saving investments/ expenses made in Form 12BB, to your employer, at the beginning of a financial year, employer can account for these while computing TDS. This shall reduce your TDS liability and you shall have more dispos-able income. At the end of the year, by filing ITR, you can claim refund of excess tax, if any.

Will I get tax benefit on education loan taken for my daughter’s studies abroad?

—Ashok Shah

As per Section 80E, any individual who takes a loan from any financial institution or approved charitable insti-tution for pursuing higher education, whether in India or abroad, can claim deduction on the amount of interest paid for a consecutive period of eight years, beginning from the assessment year in which he has started paying the interest on loan or until the assessment year in which the interest is paid in full, which-ever is earlier. Education loan can be taken for self, spouse, children or student for whom you are the legal guardian.

I sold a flat for Rs 20 lakh last year. Do I have to show the amount in my ITR?

—Jitendra Kaushal

While selling a capital asset, you have to disclose and pay tax on capital gains so earned. Capital gains are computed by subtracting indexed cost of acquisition/ stamp duty value (whichever is higher) from sale proceeds. Both sale proceeds and indexed cost of acquisition/ stamp duty value has to be disclosed in ITR Form. If you buy another house on sale of a residential house you are entitled to deduction under Section 54 of the capital gains invested in the new house.


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