Income Tax Myths You Need to Be Aware of

Budget 2019 has brought a lot of relief to the income tax payers, but as the financial year is coming to an end, there is confusion and myths surrounding the tax deductions, the claims that we can make and investments that can benefit us in a long run.

If you are young or unaware of the financial chaotic environment, the article will help you to bust the myths.

Myth 1- EPF Contribution

You may have heard many times to invest in the employees provident fund and claim the entire tax deduction under section 80 C. The reality or the fact is you can avail the tax deductions only for the contributions that you have made from your side.

Myth 2- Rent Paid

Another common myth that surrounds us is the rent paid by the employee can be fully claimed under the head section 80C and the real fact is the rent does not let you claim the deduction.

Rent can only be claimed by a person receiving HRA as per the HRA Calculation rules prescribed in the Income Tax Act. If a salaried employee is not receiving HRA then in such case he may claim rent under section 80GG.

Myth 3- House Loan EMI

The myth that perplexes most of the home owner is they think their entire loan EMI can help them to earn deduction but the reality is only the interest paid can be claimed as deduction but the principal amount can be claimed for tax deduction under section 80C (maximum Rs. 1.5 lakhs) which includes your existing investments as well.

Myth 4– Mediclaim Policy

Health insurance schemes are a way to earn money, but the fact is these schemes can offer you benefits in the long run and you can claim deduction under section 80D for you and your family. While it offers cover for Rs 25,000 and it can increase upto Rs 30,000 if you or your spouse and a senior citizen are linked to it.

In the end, we would like to conclude that these myths restrain the people from investing in the right tax saving instrument, however, being educated about tax deductions and awareness about the different sections makes the investment process easy.