ITR Filing 2025: 5 Key Income Tax Rules You Should Know

As the new financial year begins, it’s time to prepare to file your income tax returns (ITR) for FY 2024–25. Taxpayers can file their ITR online through the Income Tax Department’s website. Before doing so, it’s important to understand some key rules and gather all necessary documents. One important step is to choose between the old and new tax regimes—each comes with its own benefits and limitations.

Choosing Between Old and New Tax Regime

There’s no single best tax regime for everyone—it depends on your income, investments, and eligible deductions.

• New Tax Regime: Offers simpler tax slabs but fewer deductions. From FY25, it provides tax exemption on income up to ₹7 lakh and includes a standard deduction of ₹75,000. 
• Old Tax Regime: Allows more deductions and exemptions, like those under Section 80C, 80D, and HRA. The standard deduction here is ₹50,000. 

Read More, ITR Filing for AY 2025-26: When Will Income Tax Return Filing Begin? Here’s What Taxpayers Need to Know. 

Save Tax through Investments (Section 80C)

If you choose the old regime, you can save tax by investing up to ₹1.5 lakh annually under Section 80C. Eligible investments include:

• Public Provident Fund (PPF) 
• Employees’ Provident Fund (EPF) 
• ELSS mutual funds 
• Tax-saving fixed deposits 
• Sukanya Samriddhi Yojana 
• Life insurance premiums 

In the new regime, only a few deductions like Section 80CCD(2) (NPS), 80CCH, and 80JJAA are available.

Home Loan Interest Deduction (Section 24b)

You can claim tax benefits on the interest paid on home loans under Section 24(b):

• For self-occupied homes: Up to ₹2 lakh deduction under the old regime. 
• For rented properties: Full interest amount can be claimed under both regimes.

House Rent and Allowance Exemptions

If you live in a rented house, you may claim House Rent Allowance (HRA) exemption (mainly under the old regime).

Other tax-free allowances include:

• Leave Travel Allowance – Section 10(5) 
• Gratuity – Section 10(10) 
• Leave encashment – Section 10(10AA) 
• Food, internet, and other work-related allowances – Section 10(14) 

Note: Most of these exemptions are available only under the old regime.

Health Insurance Deduction (Section 80D)

You can claim deductions on health insurance premiums under Section 80D:

• ₹25,000 for yourself, spouse, and children 
• ₹50,000 if any insured member is a senior citizen 
• An additional ₹25,000 to ₹50,000 can be claimed for insuring parents 

Maximum deduction allowed is ₹1 lakh, depending on eligibility.

Late Filing Penalty (Section 234F)

Missing the ITR filing deadline can lead to penalties:

• ₹1,000 if income is below ₹5 lakh 
• ₹5,000 if income is above ₹5 lakh 

Late filing of ITR can also lead to interest charges, loss of refund, or inability to carry forward losses.

Final Tip

Filing your ITR accurately and on time helps avoid penalties and ensures a smooth refund process. Choose your tax regime wisely, keep all documents ready, and consider seeking professional advice if needed.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.                 

Investments in securities market are subject to market risks, read all the related documents carefully before investing.