Budget 2016-17 has already passed by the Parliament. The Finance Minister has kept the
Personal Income Tax
slab rates unchanged for the
Financial Year 2016-17 (Assessment Year 2017-2018).
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Section 80c
The maximum tax exemption limit under Section 80C has been
retained as Rs 1.5 Lakh only. The various investment avenues or expenses that
can be claimed as tax deductions under section 80c are as below;
- PPF (Public Provident Fund)
- EPF (Employees’ Provident Fund)
- Five year Bank or
Post office Tax saving Deposits
- NSC (National Savings
Certificates)
- ELSS Mutual
Funds (Equity Linked Saving Schemes)
- Kid’s Tuition Fees
- SCSS (Post office Senior Citizen
Savings Scheme)
- Principal repayment
of Home Loan
- NPS (National Pension System)
- Life Insurance
Premium
- Sukanya
Samriddhi Account Deposit Scheme
Section 80CCC
Contribution to annuity plan of LIC (Life Insurance Corporation of India ) or any other Life Insurance Company
for receiving pension from the fund is considered for tax benefit. The maximum
allowable Tax deduction under this section is Rs 1.5 Lakh.
Section 80CCD
Employee can contribute to Government notified Pension
Schemes (like National
Pension Scheme – NPS). The contributions can be upto 10% of the salary
(or) Gross Income and Rs 50,000 additional tax benefit u/s 80CCD (1b) was
proposed in Budget 2015.
To claim this deduction, the employee has to contribute to
Govt recognized Pension schemes like NPS. The 10% of salary limit is applicable
for salaried individuals and Gross income is applicable for non-salaried. The
definition of Salary is only ‘Dearness Allowance.’ If your employer also
contributes to Pension Scheme, the whole contribution amount (10% of salary)can be
claimed as tax deduction under Section 80CCD (2).
Kindly note that the Total
Deduction under section
80C, 80CCC and 80CCD(1) together cannot exceed Rs 1,50,000 for the financial year 2016-17.
The additional tax deduction of Rs 50,000 u/s 80CCD (1b) & U/s 80CCD(2) is over and above this
Rs 1.5 Lakh limit.
Section 80D
Deduction u/s 80D on health insurance premium is Rs
25,000. For Senior Citizens it is Rs 30,000. For very senior citizen above the
age of 80 years who are not eligible to take health insurance, deduction is
allowed for Rs 30,000 toward medical expenditure.
Preventive health checkup (Medical
checkups) expenses to the
extent of Rs 5,000/- per family can be claimed as tax deductions. Remember,
this is not over and above the individual limits as explained above. (Family includes: Self, spouse,
dependent children and parents).
Section 80DD
You can claim up to Rs 75,000 for spending on medical
treatments of your dependents(spouse, parents, kids or siblings) who have 40% disability. The tax
deduction limit of upto Rs 1.25 lakh in case of severe disability can be
availed.
To claim this deduction, you have to submit Form no 10-IA.
Section 80DDB
An individual (less
than 60 years of age) can
claim up to Rs 40,000 for the treatment of specified critical ailments. This
can also be claimed on behalf of the dependents.
The tax deduction limit under this section for Senior Citizens is Rs 60,000 and
for very Senior Citizens(above 80 years) the limit is Rs 80,000.
To claim Tax deductions under Section 80DDB, it is mandatory
for an individual to obtain ‘Doctor Certificate’ or ‘Prescription’ from a
specialist working in a Govt or Private hospital.
For the purposes of section 80DDB, the following shall be the
eligible diseases or ailments:
- Neurological
Diseases where the disability level has been certified to be of 40% and
above;
(a) Dementia
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(d) Ataxia
(e) Chorea
(f) Hemiballismus
(g) Aphasia
(h) Parkinson’s Disease
- Malignant
Cancers
- Full
Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
- Chronic
Renal failure
- Hematological
disorders
- Hemophilia
- Thalassaemia
Section 24 (B)
The interest component of home loans is allowed as deduction
under Section 24B for up to Rs 2 lakh in case of a self-occupied house.
If your property is a let-out one then the entire interest amount can be
claimed as tax deduction. (Read: Understanding Tax
Implications of Income from house property)
Section 80EE
This is a new proposal which has been made in
Budget 2016-17. First time Home Buyers can claim an additional Tax
deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below
criteria has to be met for claiming tax deduction under section 80EE.
- The home
loan should have been sanctioned in FY 2016-17.
- Loan
amount should be less than Rs 35 Lakh.
- The
value of the house should not be more than Rs 50 Lakh &
- The home
buyer should not have any other existing residential house in his name.
Section 80U
This is similar to Section 80DD. Tax deduction is
allowed for the tax assessee who is physically and mentally challenged.
Section 80GG
As per the budget 2016 proposal, the Tax Deduction amount
under 80GG has been increased from Rs 24,000 per annum to Rs 60,000
per annum. Section 80GG is applicable for all those individuals who do not own
a residential house & do not receive HRA (House Rent Allowance).
The extent of tax deduction will be limited to
the least amount of the following;
- Rent
paid minus 10 percent the adjusted total income.
- Rs 5,000
per month.
- 25 % of
the total income.
Section 80G
Contributions made to certain relief funds and
charitable institutions can be claimed as a deduction under Section 80G of the
Income Tax Act. This deduction can only be claimed when the contribution has
been made via cheque or draft or in cash. But deduction is not allowed for
donations made in cash exceeding Rs 10,000. In-kind contributions such as food
material, clothes, medicines etc do not qualify for deduction under section
80G.
Section 80E
If you take any loan for higher studies (after completing Senior Secondary
Exam), tax deduction can be claimed under Section 80E for interest that
you pay towards your Education Loan. This loan should have been taken for
higher education for you, your spouse or your children or for a student for
whom you are a legal guardian. Principal Repayment on educational loan cannot
be claimed as tax deduction.
There is no limit on the amount of interest you
can claim as deduction under section 80E. The deduction is available for a
maximum of 8 years or till the interest is paid, whichever is earlier.
Section 87A Rebate
If you are earning below Rs 5 lakh, you can save an
additional Rs 3,000 in taxes. Tax rebate under Section 87A has been raised from
Rs 2,000 to Rs 5,000 for FY 2016-17 (AY
2017-18).
In case if your tax liability is less than Rs 5,000 for FY
2016-17, the rebate u/s 87A will be restricted up to income tax liability only.
Section 80 TTA
Deduction from gross total income of an individual or HUF, up
to a maximum of Rs. 10,000/-, in respect of interest on deposits in savings
account with a bank, co-operative society or post office can be claimed under
this section. Section 80TTA deduction is not available on interest income from fixed deposits.