Download Automated All in One Income Tax Preparation Excel Based Software for Financial Year 2016-17 and Assessment Year 2017-18  ( Prepare at a time Tax Compute Sheet + Individual Salary Structure + Individual Salary Sheet + Form 12 BA + Automatic H.R.A. Exemption Calculation + Form 16 Part A&B and Form 16 Part B)

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;

1.                  Life Insurance Premium: You can get the deduction by depositing or paying life insurance premium in the previous year. You must note here that premium paid on behalf of wife/husband/child or any member of the family were assessed in an HUF. Child includes adult children also, Thus, the deduction is available in respect of premium paid on a policy on the life of a married daughter.

2.                  Provident Fund & Public Provident Fund: You can claim deduction under section 80C for the amount deposit in provident fund also. The annual contribution up to Rs.1,50,000 is eligible for deduction under section 80C. In this section, you can get the total deduction up to Rs. 1,50,000, if your total contribution in PF Rs. 1,50,000 and another contribution (PPF, LIC, ULIP, etc.) is 50,000 or any amount then you will get up to a maximum of Rs.1,50,000 u/s 80C.

3.                  National Saving Certificates (NSC): You can claim deduction under section 80C for the amount deposit in national saving certification along with PPF/LIC/ULIP up to a maximum of Rs.1,50,000 accrued during the year.  There is no TDS deduction for repayment of NSC. Interest accrued during the year (except for the last year) shall be deemed to be reinvested and shall also qualify for deduction u/s 80C.

4.                  Bank Term Deposit Schemes: Amount invested in bank term deposits along with PPF/LIC/NSC/ULIP etc. up to a maximum of Rs.1,50,000 is also eligible for deduction under section 80C. The maturity period for bank term deposit schemes is 5 years.

5.                  Post Office Time Deposit Schemes: You can also opt for post office time deposit to get deduction under section 80C up to Rs.1,50,000. You must note that the deduction is available only to the first holder.

6.                  Mutual Fund Schemes: Some of the schemes of mutual funds are eligible for deduction u/s 80C .The income from mutual funds is also fully exempted u/s 10 (35).

7.                  NABARAD Rural Bonds: The deduction is also available under section 80C for a subscription to notified bonds issued by National Bank for Agriculture and Rural Development.

8.                  ULIP (unit-linked insurance plan): The deduction is also eligible for the amount deposit in the name of himself, his/her wife/husband or his child, and an HUF in the name of its members to any Unit Linked Insurance Plan of UTI.

9.                  Tuition Fees: You can claim the deduction of paying the tuition fee of your two children. Here, you should note that tuition fees eligible paid to any university, college, school or other educational institution situated in India. However, any development fees or donation or payment of similar nature shall not be eligible for deduction.

·         Section 80CCD: Employee can contribute to Government notified Pension Schemes (like National Pension Scheme – NPS).

Deduction under this section is only for individual not for HUF’s. The contributions can be up to 10% of the salary (or) Gross Income and Rs 50,000 additional tax benefit u/s 80CCD (1b) was proposed in Budget 2015. In budget 2016, on withdrawal from the NPS account up to 40% of the accumulated balance shall be exempt from tax and the remaining would be taxed as per the income tax slab in the year of receipt.

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) 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 (attained the age of 60 years and above) it is Rs 30,000. For very senior citizen above the age of 80 years who are not eligible to take health insurance, they shall be eligible for medical expenditure up to Rs. 30,000 towards medical expenditure.

Preventive health check-up (Medical checkups) expenses to the extent of Rs 5,000/- per family (Self, spouse, dependent children, and parents) can be claimed as tax deductions. Please note, this is not over and above the individual limits as explained above.

·         Section 80DD: You can claim up to Rs 75,000 for spending on medical treatments of your dependents, who have 40% disability. The tax deduction limit of up to Rs 1.25 lakh in case of severe disability can be availed.

·         Section 80DDB: An individual whose age is less than 60 years can claim up to Rs 40,000 for the treatment of specified ailments (such as AIDS, cancer, and neurological diseases). This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens (attained the age of 60 years and above) 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.

·         Section 24 (B): The interest component of home loans is allowed as a deduction under Section 24B for up to Rs 2 lakh in case of a self-occupied house.

·         Section 80EE: This is a new proposal which has been made in Budget 2016-17. The 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: If you claim deduction u/s 80DD then you can not claim under this section. A 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 House rent allowance.

The extent of tax deduction will be limited to the least amount of the following;

·         Rent paid minus 10% 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. But the deduction is not allowed for donations made in cash exceeding Rs 10,000.

·         Section 80E: If you take any loan for higher studies, 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 a tax deduction.

There is no limit on the amount of interest you can claim as a 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).

·         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.

On September 06, 2016 by www.taxexcel.net

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Deductor's Sheet

Download All in One TDS on Salary for Central Govt employees for F.Y.2015-16 [This Excel Utility can prepare at a time Tax Compute Sheet + Automatic HRA Exemption Calculation + Automatic Form 16 Part A&B and Form 16 Part B for F.Y.2015-16]

Central Govt Employee's Salary Structure

 

Tax Computed Sheet

 

Amended Format of Form 16

Salaried Employees are a relieved lot now after fulfilling all the formalities for Income Tax 2014-15. But, by that time six months in the new financial year 2015-16 is already over.

So, preparation of statement for salary income, deductions and saving under various clauses of Income Tax Act in respect of Financial year 2015-16 is already due for submission to the employer.

Tax Planning and submission of statement to that effect to the employer would be mainly useful to avoid additional deduction of Income Tax by the employer over and above income tax estimated by an individual on the basis of his / her savings or deductions.

This article summarises Income Tax Structure for the year 2015-16 (Assessment Year 2016-17) and also the Tax exemptions available to salaried class employees in the form of Exempt Income, Deductions and Savings.

Tax exemptions in the form of Exempt Income, Deductions and Savings

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)

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)

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.
• 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:

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.

[Download HRA Exemption Calculator in Excel]

 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: Max Rs. 1.5 Lakh

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):

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 challanged 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 the given below:-

• 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

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 availment 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.

7. Relief Under Section 89(1) [Download 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.

Deductions under 80C	Rs. 1,50,000
Deductions under 80CCD (1B) for contribution to NPS	Rs. 50,000
Interest on house property loan	Rs. 2,00,000
Exemption with new transportation allowance of Rs. 1,600 per month	Rs. 19,200
New deductible health insurance premium	Rs. 25,000
Total deductions / exemption	Rs. 4,44,200
Basic Income which is exempted from Income Tax	Rs. 2,50,000
Gross Total Income which can be tax free	Rs.6,94,200

It is also pertinent to note here that exemptions and deductions detailed above are common to a salaried employee.

In addition to this, by way of other deductions provided by Section 80DD to Section 80U based on specific nature of expenditure such as medical, higher studies related or physical status of employee or his / her dependents, more income could be exempted from payment of Income Tax.

Download All in One TDS on Salary for Central Govt employees for F.Y.2015-16 [This Excel Utility can prepare at a time Tax Compute Sheet + Automatic HRA Exemption Calculation + Automatic Form 16 Part A&B and Form 16 Part B for F.Y.2015-16]

On January 22, 2016 by www.taxexcel.net

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