As the final window for filing belated income tax returns for the financial year 2023-24 draws to a close on December 31, a significant number of taxpayers are seeking clarity on a crucial issue: claiming tax deductions that were not reported to their employers during the year. This common oversight can lead to higher tax deductions at source (TDS), but experts confirm that all is not lost.
Claiming Deductions at the ITR Stage: The Final Computation
The process of informing an employer about eligible investments and expenses allows for accurate calculation of monthly TDS. However, failure to do so does not forfeit your right to claim those deductions. The income tax return filing is the definitive stage for tax computation.
Siddharth Maurya, Founder and MD of Vibhavangal Anukulakara, clarifies that the TDS deducted by an employer is a provisional estimate. "The ITR filing is the final and legally valid tax computation where all eligible deductions can be claimed," he states. This means taxpayers have a second chance to correct their tax liability.
What Happens If You Didn't Declare Deductions Earlier?
Ketan Vajani, former president of the Chamber of Tax Consultants, offers reassurance. "Any deduction to which an assessee is legally entitled can be claimed through the income tax return. As long as deductions are claimed in the Return of Income, there should not be any challenge. Non-disclosure to the employer is not relevant," he explains.
The practical consequence of not declaring deductions earlier is that you likely paid more tax via TDS throughout the year. Once you correctly claim these deductions in your belated or revised ITR, the excess tax paid is adjusted. The Income Tax Department will process the return and issue a refund for any leftover amount, as noted by Maurya.
Which Deductions Can You Claim Now?
Most popular deductions under Chapter VI-A of the Income Tax Act remain claimable at the return filing stage, even now. These include:
- Section 80C: For investments in PPF, ELSS, life insurance premiums, etc.
- Section 80D: For health insurance premiums.
- Section 80E: For interest on education loans.
- Section 80G: For eligible donations.
- Section 80CCD(1B): For additional contributions to the National Pension System (NPS).
Maurya emphasizes a critical caveat: all claims must align with the chosen tax regime—old or new—as the rules differ.
However, Vajani points out an important exception. Certain profit-linked deductions under Chapter VI-A - Part C are admissible only if the return is filed by the original due date. "For Assessment Year 2025-26 (FY 2023-24), that due date has already passed. So these specific deductions are no longer available for returns filed now. All other standard deductions are possible to claim," he elaborated.
Expert Advice: Key Precautions for Taxpayers
To ensure a smooth filing process and avoid future notices, tax professionals advise caution on several fronts:
Maintain Documentary Proof: Keep all investment proofs, receipts, and statements safely. These may be required if the return is selected for assessment.
Respect Statutory Limits: Ensure your deduction claims do not exceed the limits prescribed under each section of the law.
Choose the Correct Regime: Be absolutely certain about which tax regime you are filing under and claim deductions accordingly. The new regime offers lower rates but very few deductions.
Avoid Duplicate or Inflated Claims: Do not claim the same deduction twice or exaggerate amounts, as this can lead to penalties.
Cross-Verify Figures: Compulsorily reconcile the income and TDS details in your ITR with your Form 16, Annual Information Statement (AIS), and bank statements for accuracy.
Remember, the last date for filing a belated return for FY 2023-24 is December 31, 2024. The original deadline was extended twice, with the final date being September 16, 2024. This belated return window is your last opportunity to regularize your income details and claim missed benefits for the year.
