How to Claim Deductions and Exemptions in Your ITR Filing

ITR filing

Want to get the most out of your income tax savings and pay less in taxes? Smarter money management means knowing how to claim deductions on ITR filing and get the most out of tax breaks. This simple ITR guide will help you find your way around the world of ITR deductions. It will also explain the difference between exemptions and deductions and show you how to get the most out of your 2025 income tax return.

What are tax exemptions and deductions?

It is very important to know the difference between tax exemptions and ITR deductions before you start your ITR filing. Each one saves you tax money in its own way:

  • Tax exemptions are parts of your income that you don’t have to pay taxes on. Some examples of tax exemptions are interest from a PPF account or long-term capital gains that are reinvested in certain assets. These amounts don’t count toward your taxable income at all.
  • ITR deductions are specific amounts that you can take out of your total income because of investments, costs, or donations. With these income tax savings, your taxable income goes down, which means you pay less in taxes overall. Life insurance premiums, home loan interest, and donations are some examples.

You can save a lot of money on taxes and get more income tax benefits by using tax exemptions and ITR deductions.

How to File an ITR and Get Deductions: The Basics

What you need to do to get ITR deductions is

1. Pick the right tax system:

  • Tax breaks and deductions for a lot of things were possible under the old system, such as the HRA, LTA, Section 80C, 80D, and more.
  • The new system has lower tax rates and a higher exemption limit, but it only lets people deduct a few things, mostly the standard deduction for salaried individuals.

2. Learn who can get each deduction and exemption. 

Each one has its own rules. You may or may not be eligible depending on your age, marital status, income, and the types of investments or expenses you have.

3. Keep records up to date:

Donation certificates, receipts, investment proofs, and policy documents should all be on hand. If your tax return is being looked over, the Income Tax Department may ask for these.

4. Fill out the right parts of the ITR:

Put in your ITR deductions and tax exemptions where they belong on your ITR filing, and if needed, upload documents to back them up.

The most common ITR deductions and tax exemptions can help you save money on your income taxes.

1. Section 80C: The Most Common Tax Break

You can get up to ₹1.5 lakh a year back under Section 80C for things like investments and costs like

  • Costs of life insurance
  • Pension Plan for Workers (EPF)
  • Fund for the Public Provident Fund
  • Mutual funds for ELSS
  • Certificate of Savings from the Government
  • Fees for kids’ school
  • Payment of the loan’s principal

2. Section 80D: Health Insurance

You may be able to get up to ₹25,000 to pay for health insurance for you, your spouse, and your children. If your parents are insured, you can get an extra ₹25,000 (₹50,000 if they are over 65).

3. Section 24(b): Interest on a home loan

You can get up to ₹2 lakh a year back for the interest you pay on a home loan for a home you live in yourself. Along with the principal repayment required by Section 80C, this is also being paid.

4. House Rent Allowance (HRA) and Landlords’ Allowance (LTA)

Based on certain rules, if you get HRA as part of your salary, you can claim tax breaks for rent paid. You don’t have to pay the Leave Travel Allowance (LTA) either if you’re only traveling within India and can show proof.

5. Section 80E: Interest on Education Loans:

For up to 8 years, you can deduct all the interest you pay on student loans.

6. Part 80G: Donations

You can deduct up to 100% or 50% of the amount you donate to certain charities and relief funds, depending on the organization.

7. Other Good Reasons to Deduct

  • Section 80TTA/80TTB: Up to ₹10,000 for non-seniors and up to ₹50,000 for seniors can earn interest on savings accounts.
  • Section 80EE/80EEA: First-time buyers can get extra interest on their home loans
  • Section 80U/80DD/80DDB: Tax breaks for people with disabilities and some medical conditions

ITR Claim Deductions: Old vs. New Tax System

The old system was best for people who can get a lot of tax breaks and deductions. Section 80C, 80D, HRA, LTA, and other tax breaks can be added on top of each other to get the most tax breaks.

There are fewer deductions allowed under the new system, but the standard deduction for salaried taxpayers is the only one that is allowed. The new system is simpler and has lower rates and a higher exemption limit (up to ₹12 lakh for everyone and ₹12.75 lakh for salaried taxpayers with standard deduction).

Before you file, compare how much tax you will have to pay under each system. Old rules may give you bigger income tax savings if you have big investments, insurance, or home loan costs.

How to File and What to Bring: Your ITR filing Guide

  • For each deduction or exemption, make sure you fill out the right part of your ITR filing form.
  • Attach proofs if the portal asks for them. These could be scanned copies of receipts, investment certificates, insurance policies, or other things.
  • Check your work before sending it in. You might not get your ITR deductions or tax breaks if you make mistakes or don’t have all the documents you need.
  • If the Income Tax Department asks to see proof, keep all of your papers for at least 6 years.

Common Mistakes to Avoid When Claiming Deductions and Exemptions

  • Claiming ineligible deductions or exemptions
  • Not keeping the right records
  • Putting numbers in the wrong places on the ITR form
  • Not comparing the old and new tax systems to get the most tax breaks
  • Not taking advantage of less well-known tax breaks (like Section 80E80EEA or 80G)

Smart ITR deductions can help you save the most on your income taxes.

Making sure you claim all the right ITR deductions and tax breaks is the best way to save more on your income taxes. Read this ITR filing guide to learn the rules, make sure you have all the paperwork you need, and always make sure you can claim tax breaks before you do so. If you know how to claim deductions on ITR, you will get bigger tax refunds and lower tax bills every year, no matter if you are a salaried worker, self-employed, or a business owner.

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