Tax exemptions in the form of
Exempt Income, Deductions and Savings for Financial Year 2015-16 & Ass Year 2016-17
1. Exempt Income under Chapter 10 of Income Tax Act, such as House Rent allowance, Tranport Allowance, LTC
etc.
2. Savings which are eligible for Tax Exemption up to Rs. 1.5 lakh under Section 80C,
Section 80CCC and Section 80CCD(1)
3.
Additional Savings eligible for Tax
Exemption up to Rs. 50,000/-
under Section 80 CCD (1B) over and above Savings Cap of Rs. Rs. 1.5 lakh, if
the amount is invested in NPS (Govt run Contributory Pension System which is
known as National Pension System)
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4.
Deduction (up to 10% of salary) towards Contribution made by Employer in any of
Pension fund such as NPS, approved by Central Government, under Section
80CCD(2), which will be over and above savings value cap of Rs. 1.5 lakh under
Section 80CCE plus additional savings of Rs.50,000 under Section 80CCD(1B)
5.
Eligible deductions from Income from Section 80 D to 80 U towards amount spent
on health insurance, medical treatment for disabled dependents, interest on
higher education loan etc.
6.
Deduction of up to Rs. 2 lakh in respect of loss (interest) incurred on
self-occupied House Property (and unlimited interest in respect of rented
property) under Section 24 of Income
Tax Act.
7.
Relief Under Section 89(1) Click here to download the Automatic Arrears Relief CalculatorFrom FY 2000-01 to FY 2015-16
1. Exempt Income and Allowances
under Section 10 of Income Tax Act
Income
given below are exempt income and hence these need not included while
calculating Total Income of a Salaried Employee
·
Agricultural Income [Section 10(1)]
·
The sum received (including the bonus) under a life insurance
policy (other than any sum received under sub-section (3) of section 80DDA or
under a Keyman insurance policy).[Section (10)(10)(D)]
·
Amount of LTC or LTA actually incurred. [Section 10(5)]
·
Any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India . [Section
10(7)]
·
Any special allowance or benefit, such as Travelling Allowance,
Uniform Allowance etc which are incurred for the performance of the duties of
an office or employment . [Section 10(13A)]
·
The transport allowance granted to an employee
to meet his expenditure for the purpose of commuting between the
place of his residence and the place of duty is exempt to the
extent of Rs. 1,600/- per month or Rs. 3200 per month (for a visually
challenged person) [Section 10 (14)]
·
Scholarships granted to meet the cost of education.[Section
10(16)]
·
Children Education allowance:
Rs. 100/- per month per child up to a maximum of 2 children.
Rs. 100/- per month per child up to a maximum of 2 children.
·
Hostel Subsidy: Rs. 300/- per month per child upto a maximum of
two children.
·
Other Allowances exempted under Section 10 of IT Act are Tour
TA, Tour Daily Allowance, Academic, research or training allowance, uniform
Allowance, Special Compensatory Allowance, High Altitude Allowance, Climate
Allowance, allowances applicable to North East, Hilly areas of U.P., H.P. and J
& K, border area allowance, Compensatory Field Area Allowance, Counter
Insurgency Allowance, High Active Field Area Allowance, island duty allowance,
tribal allowance etc.
Exemption under Section 10 (13A) in respect of HRA – Calculation Method: Click here to Download theAutomated H.R.A. Exemption Calculator U/s 10(13A)
Least
of the following amount is to be treated as exempt from Income Tax.
·
Actual House Rent Allowance Received, or
·
Rent
paid in excess of 10% of Pay in Pay band and Grade Pay or
· 50%
of Pay in Pay band and Grade Pay if the employee is in
Chennai/Mumbai/Kolkatta/Delhi and 40% of Pay in Pay Band and Grade Pay for the
employees is in other places.
·
If
the employees resides in his/her own house or in a house for which he/she does
not pay any rent, no HRA exemption is available.
2. Savings which are eligible for Tax Exemption Section
80C, Section 80CCC and Section 80CCD
Section
80C, CCC and CCD(1) allow deduction from total income. The total deduction
under this section (alongwith section 80CCC and 80CCD(1) is limited to Rs. 1.50
lakh only.
Section 80C:
·
Life Insurance Premium For individual, policy must be in self or
spouse’s or any child’s name. For HUF, it may be on life of any member of HUF.
·
Sum paid under contract for deferred annuity for individual, on
life of self, spouse or any child .
·
Sum deducted from salary payable to Govt. Servant for securing
deferred annuity for self-spouse or child Payment limited to 20% of salary.
·
Investment in Senior Citizens Savings Scheme 2004 for 5 year by resident individuals.
·
Contribution made under Employee’s Provident Fund Scheme.
·
Contribution to PPF For resident individual, can be in the name of
self/spouse, any child & for HUF, it can be in the name of any member of
the family.
·
Deposit in Sukanya Samriddhi Account as natural / legal guardian
of girl child.
·
Contribution by employee to a Recognised Provident Fund.
·
Sum deposited in 10 year/15 year account of Post Office Saving
Bank
·
Subscription to any notified securities/notified deposits
scheme. e.g. NSS
·
Subscription to any notified savings certificate, Unit Linked
Savings certificates. e.g. NSC VIII issue.
·
Contribution to Unit Linked Insurance Plan of LIC Mutual Fund
e.g. Dhanrakhsa 1989
·
Contribution to notified deposit scheme/Pension fund set up by
the National Housing Scheme.
·
Payment made by way of installment or part payment of loan taken
for purchase/construction of residential house property.
·
Subscription to units of a Mutual Fund notified u/s 10(23D).
·
Subscription to deposit scheme of a public sector, company
engaged in providing housing finance.
·
Subscription to equity shares/ debentures forming part of any
approved eligible issue of capital made by a public company or public financial
institutions.
·
Tuition fees paid at the time of admission or otherwise to any
school, college, university or other educational institution situated within India for the
purpose of full time education of any two children. Available in respect of any
two children.
Section 80CCC:
Deduction
in respect of Premium Paid for Annuity Plan of LIC or Other Insurer. Payment of
premium for annuity plan of LIC or any other insurer Deduction is available
upto a maximum of Rs. 150,000/-.
The
premium must be deposited to keep in force a contract for an annuity plan of
the LIC or any other insurer for receiving pension from the fund.
Section 80CCD (1):
Deduction
in respect of Contribution to Pension Account (by Assessee). Deduction
available for the amount paid or deposited in a pension scheme notified or as
may be notified by the Central Government subject to a maximum of :
(a)
10% of salary in the previous year in the case of an employee
(b)
10% of gross total income in any other case.
Section 80CCD(1A):
The
maximum deduction allowable under this section is Rs. 1.00 lakh. in case of
contribution to New Pension Scheme (NPS), it is Rs. 1.50 lakh w.e.f. 01.04.2015
3. Additional Savings eligible
for Tax Exemption up to Rs. 50,000/- under Section 80 CCD (1B)
Section 80CCD(1B):
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Contribution
in NPS has been given more tax concession in the budget 2015. As per Section
80CCD(1B), an additional deduction of up to Rs. 50,000 over and above the
Section 80C, 80CCC and 80CCD savings cap of Rs. 1.5 lakh, is allowed if such
amount is contributed by the employee. So, overall tax savings of Rs. 2 lakh
can be availed under Section 80C, 80CCC and 80CCD(1).
4. Deduction in respect of
Contribution to Pension Account by Employer under Section 80CCD (2):
Deduction
under Section 80CCD(2) is available for the amount paid or deposited by the
employer of the assessee in a pension scheme notified or as may be notified by
the Central Government subject to a maximum of 10% of salary in the financial
year. This deduction is allowed over and above Savings value cap of Rs. 1.5
lakh under Section 80CCE (in the case of investment in NPS, savings value cap
eligible for deduction will be Rs. 2 lakh).
5. Eligible deductions from
Income from Section 80 D to 80 U towards amount spent on health insurance,
medical treatment etc.
Section 80D: Deduction in respect of Medical Insurance:
Deduction
is available upto Rs. 30,000/- for parents who are senior citizens and upto Rs.
25,000/- in other cases for insurance of self, spouse and dependent children.
Amount of up to Rs.5000/- spent on preventive health check-up. So a maxium of
Rs. 60,000 can be deducted which is spent towards Health Insurance premium.
Section 80DD: Deduction for medical treatment of physically
challenged dependents:
In
the case of salaried employee who is taking care of physically challenged
Dependent Relative, an amount with the maximum limit of Rs.75000/- spent
towards medical treatment or rehabilitation can be deducted from the income (In
the case of severe disability maximum deduction would be Rs. 1,25,000).
Section 80DDB: Deduction in respect of specified disease:
Deduction
in respect of specified disease for self or dependent relatives is allowed
lower of Rs.60,000 or actual amount paid. This deduction amount increases to
Rs.80,000 in case of senior citizen.
Section 80E: Deduction in respect of Interest on Loan for Higher
Studies:
Deduction
in respect of interest on loan taken for pursuing higher education. The
deduction is also available for the purpose of higher education of a relative.
Section 80G: Deduction for Donations
Notified
donations under Sec. 80G will be eligible for deduction ( 100% or 50% as per
the notification condition)
Section 80GG: Deduction in respect of House Rent Paid
Deduction
available is the least of
·
Rent paid less 10% of total income
·
Rs. 2000/- per month i.e. Maximum
Deduction available is 24,000/-
·
25% of total income subject to
·
Employee or his/her spouse or minor child should not own
residential accommodation at the place of employment.
·
No HRA is received.
·
No self occupied residential premises in any other place.Section
80GGA: Deduction in respect of certain donations for scientific research or
rural development
Section 80 TTA: Deduction from
gross total income in respect of any Income by way of Interest on Savings
account
Maximum
of Rs. 10,000/-, in respect of interest on deposits in savings account ( not
time deposits ) with a bank, co-operative society or post office
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Section 80U: Deduction in respect of Person suffering from
Physical Disability
Deduction
of Rs. 75,000/- in respect of tax payer suffering from a physical disability.
In the case of severe disability, deduction of Rs. 125,000/- will be allowed.
Certificate from the approved medical authorities regarding the extent of
disability will have to be produced (Rule 11D)
6. Deductions Allowable under
Section 24 of Income Tax Act in respect of interest on house property :
Housing
Property bought or constructed on or after 01.04.99 (completed within 3 years
from a ailment of loan) and self occupied will be eligible for deduction of
interest paid on housing loan with the maximum limit Rs. 2,00,000/-. In other
cases deduction in respect of interest paid up to Rs.30,000 will be allowed. If
the said house property is not self-occupied there is no limit in deduction in
respect of interest paid on housing loan subject to inclusion of rental income
in respect of the house property.
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7. Relief Under Section
89(1) :- Click here to download Automated Arrears Relief Calculator Up
to date
Relief u/s 89(1) is available to an employee when he
receives salary in advance or in arrear or when in one financial year, he
receives salary of more than 12 months, or receives ‘profit in lieu of salary’
covered u/s 17(3). Relief u/s 89(1) is also admissible on family pension, as
the same has been allowed by Finance Act, 2002 (with retrospective effect from
1/4/96).
To
sum-up, over and above the Basic Income Tax Exemption limit of Rs. 2.5 lakh for
the financial year 2015-16 available to Salaried Employees, maximum additional
income tax exemption for income up to Rs.4,44,200 can be availed. Maximum
Amount that can be saved / deducted to avail this income tax exemption benefit
are tabulated below. So, a salaried employee who earns gross total income of
Rs. 6,94,200/- and avails income tax exemption benefit by way of savings and
deductions detailed below, need not pay any income tax.
Source: Finance Bill 2015