Click here to Download Automated Form 16 Part A&B and Part B for F.Y. 2015-16 [ This Excel utility prepare One by One Income Tax Form 16 ]
How
to save income tax in 2015-16
The question that I
am asked most often is that my income is Rs. XXXXXXX, what tax planning can I
do to save tax?
This
article is dedicated to answering that question on income tax planning. A comprehensive list of
all the provisions that you can utilize to reduce your taxable income.
Income Tax Slabs
Income tax slabs have
been changed this year. Standard deduction limit has been raised to Rs.
2,50,000 for both Male and Female assesses.
Download Automated Income Tax Form 16 Part B for F.Y.2015-16 [This Excel Utility can prepare at a time 50 employees Form 16 Part B]
Income
Tax Exemptions:
1) Section 80 C Limit – New item added this year
·
Deduction on premium paid for a life insurance policy, taken
after 1 April 2012, will be allowed only if yearly premium is less than 10% of
sum assured. If its more than 10% then it will be not eligible for
deduction u/sec. 80C
·
ELSS (Mutual Fund)
·
PPF (upto Rs. 1,50,000)
·
EPF
·
FD for 5 years
·
Pension Plans
·
NSC
· Expenditure on Children Education (For up to 2 children only for
full time education)
·
Tuition fees (Only Tuition fees excluding Development Fees,
Donations, etc)
·
Housing loan principal
·
Deferred Annuity
·
Approved Super Annuation Fund
·
Investments under Sukanya Samriddhi Scheme. Even interest is
exempt.
2) Section 80CCD – Raised this year
Deduction
under this section can be claimed only if the contribution to your NPS account
is made by your employer and
the deduction is limited to a maximum of 10% of your basic salary. Returns
on NPS are tax free, but withdrawal is still taxable. The deduction under sec
80CCD is over and above the deduction available under sec 80C. Max deduction allowed is Rs. 50,000.
3) Section 80 D –
Raised this year
Deduction under
section 80D
·
Deduction of Rs. 25000/- is allowed if the same is paid as
premium for Medical Insurance taken for self / dependents or towards preventive
health check-up (max Rs. 5000). In case any of self / dependents is a senior
citizen, the deduction allowed is Rs. 20000/-
·
Additional Rs. 15000/- is allowed as deduction if the same is
paid as premium for Medical Insurance taken for parents. In case the parent is
a senior citizen, the deduction allowed is Rs. 30000/-
Age profiles
|
Premium paid for medical
insurance
|
Total Deduction under Sec.
80D
|
|
Yourself, your spouse and
kids, if any
|
Parents
|
||
Every one is under 60 years
|
25,000
|
25,000
|
50,000
|
You and your family are less than 60 years
& parents are above 60 years
|
25,000
|
30,000
|
55,000
|
You and your parents are of 60 years and
above
|
30,000
|
30,000
|
60,000
|
4) Section 80 CCD (1B) – New include Max. Rs. 50,000/- out of Max Limit of U/s 80C 1.5 Lakh
Click here to Download Automated Form 16 Part B for F.Y.2015-16 [ This Excel Utility can prepare One by One Form 16 Part B]
5) Section 80DD –
Raised this year
Deduction under
section 80DD
·
Exemption given for expenditure made for a disabled dependant
towards Medical Treatment/Training/Rehabilitation. It also includes the
LIC/Insurance premium paid towards maintenance of such dependant.
·
Maximum deduction allowed is Rs. 75,000/- in case of normal disability
and Rs. 1.25 Lakh in
case of severe disability.
6) Section 80DDB – Raised this year
Deduction under
section 80DDB
·
Exemption given for expenditure incurred on specified disease or
ailments such as cancer/aids.
·
Maximum deduction allowed is Rs. 80,000/-.
List of ailments covered:
(i) Neurological Diseases where the disability level has
been certified to be of 40% and above,
1.
Dementia ;
2.
Dystonia Musculorum Deformans ;
3.
Motor Neuron Disease ;
4.
Ataxia ;
5.
Chorea ;
6.
Hemiballismus ;
7.
Aphasia ;
8.
Parkinsons Disease ;
(ii) Malignant Cancers ;
(iii) Full Blown Acquired Immuno-Deficiency Syndrome
(AIDS) ;
(iv) Chronic Renal failure ;
(v) Hematological disorders :
1.
Hemophilia ;
2.
Thalassaemia.
7) Section 80E – Unchanged this year
Deduction
under section 80E
Deduction is allowed for repayment of interest component of Higher Education loan. All education after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.
Deduction is allowed for repayment of interest component of Higher Education loan. All education after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.
8) Section 80G – Unchanged this year
·
Contribution to exempt charities – 25/50/75/100% depending on
the charity and as per approval
·
100% exemption on donation to political parties
9) Section 80U – Unchanged this year
·
Deduction upto Rs.
75,000/- is allowed in case of Permanent Disability.
·
In case of Permanent Disability exceeding 80%, maximum deduction
allowed is Rs. 1,25,000/-.
10) Section 24(1)(vi) & Section 80EE – Unchanged this year
·
Housing loan interest. Maximum allowed limit
raised to – Rs. 2,00,000 (for
loans taken after 1 April 1999. For loans before that Maximum Investment Limit
was 30,000).
·
Additional deduction of Rs. 1 lac will be applicable to persons taking first home loan of up to Rs. 25 lacs for property worth
upto Rs. 40 lac.
For such persons, the total deduction will be Rs. 2.5 lacs (Rs. 1.5 lac
available under section 24(1)(vi) and Rs. 1 lac available under this new
section 80EE).
10) Superannuation – Unchanged this year
Any contribution made
by a company to superannuation fund upto Rs. 1,00,000 tax free in the hands of
the employee.
11) Conveyance/Transport Allowance – Raised this year
Any
Conveyance / Transport Allowance given to an employee is tax free upto Rs. 19,200 /- P.A. (No Supporting Bills required).& Phy.Disable persons can get relief Rs. 38400/- P.A.
12) Medical Allowance – Unchanged this year
Any Medical Allowance
given to an employee is tax free upto Rs. 15,000 /- (Supporting Bills
required).
13) HRA – Unchanged this year
Any House Rent
Allowance given to an employee is tax free upto the minimum value of the
following conditions (subject to – when an employee can produce rent paid
receipts from landlord for the period and if the employee has not availed of
tax exemptions for home loan interest / principal repayment):
1.
50% of Annual Basic (40% of Annual Basic in case of non-metros)
2.
Actual HRA received
3.
Rent Paid – (10% of Annual Basic)
14) Section 80TTA – Savings Bank Interest – Unchanged this year
No tax will be
charged on interest earned on balance in savings bank account subject to a
maximum of Rs. 10,000 per year.
15) Section 87A – Tax Rebate – Unchanged this year
Tax rebate of Rs. 2000/- will be given to
all those whose total annual income is up to Rs. 5,00,000.
