When Can’t You Claim Deductions Under Section 16

 When Can’t You Claim Deductions Under Section 16

Every income tax recipient is vigilant about getting reimbursements and rebates whenever and wherever possible! Yes, being a responsible citizen means being true to the government and paying the justified amount of tax. And to keep this spirit up, the Income Tax Department cuts some slack under different provisions. One such provision is the deduction under Section 16 that benefits the salaried individuals of both government and private sectors. It also accounts for the senior citizens who earn money through interest and pension. But it is not a free service! You have to meet the eligibility criteria laid by the government. 

So, what conditions will restrict you from claiming the deduction under Section 16 of Income Tax Act? As a taxpayer, you must be aware of these small details that make an immense change in your ITR file. If you are not eligible for deductions, there is no point in making an application for the same! Let us discuss the circumstances under which you cannot claim any deductions under Section 16 of the Income Tax Act, 1961. 

When Working Individuals Cannot Claim Deductions 

If you are a salaried individual below the age of 60, the following conditions are true for you. In the following conditions, you will not be able to claim deductions. 


  • If The ITR File Is Not Filed 


An ITR file is a must for every taxpayer looking for rebates or reimbursements from the Income Tax Department. If you have not filed the ITR within the said limit, you will not be eligible to gain the rebate. 


  • If Net income Exceeds 5 Lakhs Limit 


As per the income tax provision of deduction under Section 16, every individual’s annual income must be INR 5 lakhs or below to be eligible for the rebate. If your net income, including all your earnings from indirect sources, exceeds 5 lakhs, you will not get deductions. 


  • Tax Payable Is Higher Than INR 12,500


The amount of deductions is equal to the tax payable. If your taxable income is higher and the amount you owe to the government exceeds this limit, your rebate account will become nil. 


  • Earning Member Is an NRI 


If you are an NRI or you earn some amount of your annual income in foreign currencies, you will not be eligible for the rebate. 


  • If The Next Taxation Circle Has Started 


Every taxpayer has to claim his deduction under Section 16 every financial year. If you miss filing your ITR file the same year and the next session starts, you cannot claim deductions. 

When Senior Citizens Cannot Claim Deductions 

Senior citizens earning money from pensions and investments are eligible for deductions. However, in the following conditions, there is no alternative. 


  • If One Does Not Have An Independent Source of Income 


Some senior citizens choose to work in small firms even after retirement. If you are one of them, you can claim deductions. But if you get an allowance from your children or any other family member, your income is not taxable. So, you must be an independent earning citizen to be able to gain deductions. 


  • If One Earns Money From Rent & FD 


If you earn from FD or rents, your income does not qualify as salaried income. In that case, you will not be able to claim deduction under Section 16. The interest earned from FDs does not qualify as a “salary” in the tax regime.


Under any of these said circumstances, you will not be able to claim deduction under Section 16. And even if you are eligible, you must ensure to take the help of any professional service provider to calculate the deductions and apply for them. Any miscalculation can lead you to lose the rebate!


Issac Schultz