The Finance Budget 2016 has to introduce or extend the Tax Deduction limits Under few Sections of the Income Tax Act. For the Financial Year 2016-17 & Assessment Year 2017-18.
Let us understand all the important sections and new introduce in respect to ‘Income Tax Deductions 2016-17′. This list will help you in planning your taxes.
Income Tax Deductions 2016
The maximum tax exemption limit under Section 80C has been retained as Rs 1.5 Lakh only. The various investment avenues under this section are;
- 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 Savings 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
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Contribution to annuity plan of LIC (Life Insurance Corporation of India) or any other Life Insurance Company for receiving the pension from the fund is considered for tax benefit. The maximum allowable Tax deduction under this section is Rs 1.5 Lakh.
An employee can contribute to Government notified Pension Schemes (like National Pension Scheme – NPS).
The contributions can be up to 10% of the salary (or) Gross Income and Rs 50,000 additional tax benefit u/s 80CCD (1b) is proposed in Budget 2015.
In FY 2014-2015, the maximum tax exemption allowed under Section 80CCD is Rs 1 Lakh only.
In Financial Year 2015-2016 or Assessment Year (2016-2017), this will be Rs 1.5 Lakh (u/s 80 CCD 1 ) and additional exemption of Rs 50,000 u/s 80CCD (1b) will be allowed. ( To claim this deduction, the employee has to contribute to Govt recognized Pension schemes like NPS)
(10% of salary 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 the tax deduction under Section 80CCD (2). The ceiling limit of 1.5 Lakh u/s 80CCD is not applicable on employer’s contribution.)
Download All in One TDS on Salary for Govt & Non Govt employees for F.Y.2016-17 and A.Y.2017-18 [This Excel utility can prepare at a time Tax Computed Sheet + Individual Salary Sheet + Automatic Arrears Relief Calculator U/s 89(1) with Form 10E + Automatic H.R.A. Calculation U/s 10(13A) + Automated Form 16 Part A&B and Form 16 Part B for F.Y.2016-17 as per the Finance Budget 2016]
Deduction u/s 80D on health insurance premium will be Rs 25,000, increased from Rs 15000. For Senior Citizens it has been increased to Rs 30,000 from the existing Rs 20,000. For very senior citizen above the age of 80 years who are not eligible to take health insurance, the deduction is allowed for Rs 30,000 toward medical expenditure.
An individual (less than 60 years of age) can claim up to Rs 80,000 for the treatment of specified critical ailments.
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Section 24 (B) H.B.L.Interest
You can claim up to Rs 2 Lakh as the tax deduction on the home loan interest payment. If your property is a let-out one then the entire interest amount can be claimed as the tax deduction.
Section 80EE Additional H.B.L.Interest.
You can claim up to Rs 1.5 Lakh as the tax deduction on the home loan interest payment Excluding the Section 24(B).
You can claim up to Rs 75,000 (increased from the existing Rs 50,000) for spending who have up to 80% disability. It is also been Introduce to increase the limit of deduction from Rs 1 lakh to Rs 1.25 lakh in case of above 80% severe disability.
The other sections are – Section 80E (tax deduction benefit on the interest payment of an education loan), Section 80 G (Donations), Section 80GG (when HRA is not paid by the company but you incur rental expenses) and 100% TAX DEDUCTION on contributions made to SWACHH BHARAT & CLEAN GANGA initiatives have also been proposed.
The above ‘Income Tax Deductions 2015′ are applicable for Financial year 2015-2016 (or Assessment Year 2016-2017).
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Section 80TTA:- Interest from Bank up to Rs. 10,000/- who’s taxable income less than 5 Lakh.
Section 87A :- Tax Rebate Rs.5,000/- can be availed from the F.Y.2016-17 as this Rebate was in F.Y.2015-16 Rs.2,000/-
