Myths Regarding Tax Deduction
Not all of us are familiar with various tax deduction concepts and the benefits we can avail from those. We tend to follow certain myths regarding tax deduction and we end up making the whole process of taxation too complex. Let’s understand some common tax myths.
Tax Deduction and its Myths
Here are some of the popular tax deduction myths:
Myth No 1: Even if you have two houses, interest and repayment related deductions are applicable only to one house.
Fact: An individual can take two housing loans for two separate houses. If one house is your residence, then the other can be let out for rent. Remember, its rental value is considered taxable. One can claim deduction of Rs.100, 000 in respect of repayment and up to Rs.150, 000 in respect of interest paid on a housing loan under section 80C of the Income Tax Act. Remember, there is no such limit in case of property that is let out.
Myth No 2: Tax deduction can be claimed on the whole amount paid as home loan repayment.
Fact: Tax deduction is only allowed on the amount paid as the repayment of the principal. Also, interest to be paid on a house loan is not deducted directly from one’s salary or business income.
Myth No 3: The process of filing of tax returns is very cumbersome and complicated.
Fact: Filing tax returns is quite a simple process if you follow the set norms. The government has specified ITR1 as the form to be filled by the individuals who have only salary and interest income. For those who earn through house property or capital gains, the specified from is ITR2. One can also file tax returns online.