Summary
Many taxpayers make the mistake of claiming ineligible deductions in their income tax return under Sections 80C, 80D or HRA. Here’s a practical guide to avoid common mistakes, prevent notices, and file your ITR accurately this year.
Introduction: Why ineligible deduction claims in income tax return are risky
Income tax return filing season is here — and so is the temptation to overclaim deductions. But beware: claiming ineligible deductions under Sections 80C, 80D, or HRA (Section 10(13A)) can trigger scrutiny, delay refunds, or worse — invite notices and penalties under Section 270A of the Income-tax Act.
Let’s break down the most common mistakes and show you how to claim deductions legally and smartly this year.
Most common ineligible deduction claims to watch out for
1. Double claiming same investment under 80C
- EPF + PPF + LIC? Great.
- But if you include the same LIC premium in both yours and spouse’s 80C – it’s not allowed.
- Ensure ownership and payment is clearly traceable to your PAN and bank account.
2. Wrong HRA claim without rent agreement or PAN of landlord
- Section 10(13A) allows HRA exemption — only if you actually pay rent.
- CBDT Circular No. 8/2013 mandates PAN of landlord if rent exceeds ₹1 lakh/year.
- Fabricated rent receipts with no agreement or bank trail are a red flag for CPC.
3. Claiming tuition fees for non-eligible institutions
- Only full-time education in India qualifies (Section 80C(2)(xvii)).
- Coaching centres, part-time classes, foreign schools — not eligible.
- Max 2 children per taxpayer allowed.
4. Medical insurance deduction without actual payment (Section 80D)
- 80D applies only on premium paid – not if your employer pays it.
- Cash payments don’t qualify. Must be paid via banking channel.
- Health check-up limit is ₹5,000 within ₹25,000/₹50,000 ceiling.
5. Home loan principal on under-construction property
- Section 80C deduction is allowed only post-possession.
- Claiming principal before you get the keys is not permitted.
- Interest on under-construction property? Claim under Section 24(b) in 5 equal instalments after possession.
Key Rule: Only what’s paid from your account, for eligible purpose, is allowed
Remember these golden rules:
✅ Must be paid (not just due)
✅ Must be from your taxable income
✅ Must be within section-wise limit
✅ Must be supported by evidence
Legal references and CBDT guidelines
- Circular No. 8/2013, dated 10.10.2013 – Rent claim conditions
- Section 80C(2) – Eligible deduction list
- Section 80D(4A) – Mode of payment for medical premium
- Section 270A – Penalty for underreporting income (50% of tax)
Expert View: One practical tip for safe deductions
“Maintain a deduction folder in Google Drive or physical file. Keep rent agreement, insurance premium receipts, tuition fee bills, and medical payment proofs. If CPC picks your return for scrutiny, you’ll be ready,”
— Rajiv S., Chartered Accountant, Chennai
What happens if you claim wrongly?
| Mistake | Possible Consequence |
|---|---|
| Fake HRA claim | Disallowance + notice + 50% penalty (Sec 270A) |
| Duplicate 80C deductions | CPC mismatch + refund delay |
| Ineligible tuition or insurance | Deduction removed in processing |
How to fix deduction mistakes in ITR
- File a revised return before 31st December 2025 (for AY 2025–26)
- Check Form 26AS and AIS for prefilled details
- Use Efiletax’s ITR Review Service to spot mismatches and red flags before filing
Subheading with keyphrase: How to avoid ineligible deduction claims in income tax return
- Don’t copy last year’s ITR blindly
- Match deductions with actual bank outflow
- Validate with official list of eligible deductions (Refer: Income Tax Website)
- Use online tax calculators to check limits
FAQs
Q1: Can I claim LIC premium paid for my wife under 80C?
Only if you paid it from your account. She can’t claim it again.
Q2: Is HRA claim allowed if I stay with parents?
Yes, but only if there’s a rental agreement, and actual rent is paid with PAN of parent landlord.
Q3: What if I already claimed an ineligible deduction?
You can file a revised return. If caught during processing, the amount will be disallowed.
Final Word: Don’t lose your refund over false claims
Filing your income tax return with ineligible deductions may save you tax today — but cost you penalties and notices later. Stay clean, claim what you’re legally allowed, and let Efiletax help you get it right.
👉 Use Efiletax’s Smart ITR Filing service to file accurately and maximise legal deductions.