Click to Download Automated 50 employees Master of Form 16 Part A&B for F.Y.2016-17 [This Excel utility can prepare at a time 50 employees Form 16 Part A&B for F.Y.2016-17]

Let us understand all the important sections and new proposals with respect to Income Tax Deductions FY 2016-17. This list can help you in planning your taxes.

Income Tax Deductions FY 2016-17 

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 the pension from the fund is considered for tax benefit. The maximum allowable Tax deduction under this section is Rs 1.5 Lakh.

Section 80CCD

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) 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 the 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) 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, the 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 up to 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 the 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 the tax deduction. 

 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

This is similar to Section 80DD. A tax deduction is allowed for the tax assessee who is physically and mentally challenged. Max Limit for General Rs.75,000/- and more than 80% Rs.1,25,000/-

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 the 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 the tax deduction.

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

On January 18, 2017 by www.taxexcel.net

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Calculation and Taxability of House Rent Allowance (HRA). Today we are Providing a Premium guide on Calculation and Taxability of House Rent Allowance (HRA). Now you can Find  Best Notes For Calculation of House Rent Allowance. House Rent Allowance [Section 10(13A) & Rule 2A] Calculation and Tax Liability. How To Compute House Rent Allowance. We are Providing Full Computation for Calculation of House Rent Allowance for 2016-17. See the Full guide on Calculation and Taxability of House Rent Allowance (HRA), House Rent Allowance ( HRA) Calculate as per Income Tax Rules. How Much House Rent Allowance is Exempt, House Rent Allowance Exemption Calculator, House Rent Allowance ( HRA) Rules and Tax Exemption, House Rent Allowance Act, House Rent Allowance Meaning, House Rent Allowance for central Government Employees. Now you can scroll down below and check complete details regarding “Calculation and Taxability of House Rent Allowance (HRA)” with Automatic House Rent Exemption Calculator in Excel.Calculation and Taxability of House Rent Allowance (HRA)
House Rent Allowances is given by the employer to the employee to meet the expenses in connection with Rent of the accommodation which the employee might have to take. House Rent Allowance is taxable under the head salary to the extent it is not exempt under section 10(13A) of the Act.

Also here is an Excel Based Income Tax Form 16 Part A &B for the Financial Year 2016-17 & Ass Yr 2017-18.

Download Automatic Master of Form 16 Part A & B for Financial Year 2016-17.

(This Excel Utility can prepare at a time 100 and 50 employees Form 16 Part A & B as per the latest amended tax section is given by the Finance Bill 2016-17.)

1)Click here to Download Master of Form 16 Part A & B for 100 employees for F.Y.2016-17

 

2) Click here to download Master of Form 16 Part A & B for 50 Employees for F.Y.2016-17

The feature of this Excel Utility are:-

1) Automatic Calculate your Tax Liability.

2) Automatic Prepare Form 16 Part A & B after filling the each employee's Data.

5) Automatic Convert the Amount into the In-Words.

6)you can prepare more than 1000 employees Form 16 by this one Excel Utility.

Exemption of H.R.A.

House rent allowance is exempt under section 10(13A) read with rule 2A, to the extent of the minimum of The following three amounts:

(a) Actual HRA received by the employee in respect of the “Relevant Period”

(b) Excess of rent paid for the accommodation occupied by him over 10% of the salary for the “Relevant Period” (Rent Paid -10% Salary)

(c) 50% of salary where the accommodation is situated at Mumbai, Calcutta, Delhi or Chennai and 40% Of salary where the house is situated at any other place for the “Relevant Period”

The minimum of the above three amounts shall be exempt from tax and the balance shall be taxable and thus included in the gross salary of the employee.

Important Note

Condition: Under Sec 10(13A) an employee who is in receipt of House Rent Allowance can claim exemption, if he does not live in his own house, and pays rent in excess of 10% of his salary for his residential accommodation.

No entitlement to the exemption: In the following cases, exemption of HRA is not available to employee:-

(a) When an employee stays in his own house.

(b) When an employee does not pay any rent or incur any expenditure towards rent.

(c) When the rent paid is less than 10% of salary.

Relevant Period: Relevant period means the period during which the said accommodation was occupied by the Employee during the previous year.

Meaning of Salary: Total          

1.         Basic Salary             

2.    Dearness Allowance (if forming part of retirement benefits)    

3. % based commission on turnover.

Factors affecting exemption: Exemption of HRA depends upon the following factors:

(a) Salary of the employee (b) HRA Received (c) Rent Paid (d) Place of Residence

Where these four factors continue to be same throughout the year, the exemption u/s 10(13A) should be calculated

On “Annual basis”. However, if there is any change in respect of any of the above factors then calculation should be done in “Monthly basis”

The meaning of H.R.A.:-

If any allowance is given for House rent than it is called H.R.A.

Exemption of H.R.A. Under Section 10(13A) & Rule 2A:- If Employee receive H.R.A. than it will be taxable under section 10(13A) & Rule 2A as under-

A	Actual H.R.A. received	******
B	Rent Paid – 10% of Salary	******
C	40% and 50% of Salary	******
	Whichever is less	******

Note-1  40% and 50% depends on Rental place not on place of service

Note-2  50% of salary where the accommodation is situated at Mumbai, Calcutta, Delhi or  Chennai and 40% Of salary where the house is situated at any other place.

Download the Automatic House Rent Exemption Calculator in Excel 

On December 23, 2016 by www.taxexcel.net

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Is heavy tax bothering you? Don’t worry, income Tax Exemptions and deductions, give you plenty of opportunities to save tax. By using these exemptions and deductions wisely, you can reduce your tax substantially. In fact, exemptions and deductions reduce the tax liability in lacs. In this post, I am listing the available exemptions and deduction under income tax act. Use these and enjoy the tax saving.

Download Automatic Income Tax Form 16 Part A&B and Form 16 Part B for F.Y.2016-17 [ This Excel utility can prepare One by One. You can prepare more than 100 employees Form 16 Part A&B and Part B by this excel utility]

Exemptions on Allowances Under Section 10 of Income Tax Act

1. House Rent Allowance (HRA)

You may have not noticed but HRA tax exemption may give you maximum benefit. I am missing this deduction after the self-employment. However, this exemption is a real necessity. It is justified You get a  job and shift to another city. Because of your job, you live in a different place. You are forced to live in a rented accommodation. The rented flat is not by choice but because of the duty. Hence, the expense on rent is because of your job. You can’t avoid this, even if you wish. Therefore, government exempts the rent from income tax. However, you are not entitled to get this exemption automatically. Rather, your employer should pay the House rent allowance with the salary.

The HRA paid by the employer is considered for the exemption. I don’t get the HRA exemption because I don’t have an employer who can pay HRA. However, full HRA is not considered for income tax exemption. It is given according to the following formula.

Download Automatic Income Tax Form 16 Part B for F.Y. 2016-17 [ This Excel Utility can prepare One by One Form 16 Part B]

HRA Exemption Formula

 Exemption of HRA is a  minimum of these three.

1.                 Actual HRA received.

2.     Rent paid less 10% of salary.

3.     40% of Salary (50% in case of Mumbai, Chennai, Kolkata, Delhi). In this case, salary is basic plus dearness allowance (basic+DA).

Download Automatic House Rent Exemption Calculator

Leave Travel Allowance

If your employer also gives you an allowance for the vacations, It is also entitled to the income tax exemption. Employers give Leave travel allowance to its employees. you can claim LTA only if you have actually traveled. You must be on leave during this travel. Only travel fare is considered for the exemptions. Hotel stay and the food are not entitled. You can claim income tax exemption only on the travel of yourself and family. The LTA can be claimed only twice in a three-year block.  You have to produce the proof of traveling.

Transport Allowance

You go to your office or workplace from your house. You also spend on the local transport. This expenditure is also forced upon you. Therefore, the government has exempted transport allowance from the income tax, provided your employer gives you the transport allowance. You don’t need to give any receipt of this local travel. However, the tax exemption is limited to Rs 1600/month.

Children Education Allowance

Children Education allowance is also exempted from income tax. Your employer must give this allowance for availing the tax exemptions. It is Rs. 100 per month per child up to a maximum of 2 children.

Hostel Subsidy

This is another tax exemption related to your child’s education. It is Rs. 300 per month per child up to a maximum of two children. Your employer must give this allowance.

Other Allowance Eligible For Income Tax exemptions

Uniform Allowance, Special Compensatory Allowance, High Altitude Allowance, allowances applicable to North East, Compensatory Field Area Allowance, Counter Insurgency Allowance, High Active Field Area Allowance, island duty allowance, tribal allowance etc. These allowances are tax-free, but you need to produce the proof of the actual expense in some cases.

Income Tax Exemption on Interest Paid on Housing Loan

This Exemption  is also related to your accommodation because of the job. After shifting to a different place, you may opt  for your own house instead of rented accommodation. If you take the home loan for the house, the interest payment is  tax exempted. You can get maximum exemption of  Rs 2 lakh on  housing loan interest.  There are some conditions for this exemption.

The house should be self-occupied. You may get this exemption if your home is under  construction. however , he  construction should complete within 3 years. 

On December 15, 2016 by www.taxexcel.net

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Download Automated Income Tax Form 16 Part B for F.Y.2016-17 [ This Excel Utility can prepare one by one Form 16 Part B ]

NPS Tax Benefits while investing

First, let us understand the NPS tax benefits while investing.  I tried to explain the same from below image. Remember that all tax benefits while investing is only for Tier 1 NPS account (Refer the post related to difference between Tier 1 and Tier 2 of NPS at “Difference between Tier 1 and Tier 2 Account in NPS“. There is no tax benefit for the investment you do in Tier 2 NPS account.

NPS Tax Benefits under Sec.80CCD (1)

• The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).
• An individual’s maximum 10% of annual income or an employee’s (10% of Basic+DA) contribution will be eligible for deduction.
• As I said above, this section will form the part of Sec.80C limit.

NPS Tax Benefits under Sec.80CCD (2)

• There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) The amount contributed by an employer, 2) 10% of Basic+DA and 3) Gross Total Income.
• This is additional deduction which will not form the part of Sec.80C limit.
• The deduction under this section will be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

• This is the additional tax benefit of up to Rs.50,000 eligible for income tax deduction and was introduced in the Budger 2015
• Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.
• Both self-employed and employees are eligible for availing this deduction.
• This is over and above Sec.80CCD (1).

How much maximum NPS Tax Benefits available while investing?

Download Automatic Income Tax Form 16 Part A&B and Form 16 Part B for F.Y.2016-17 [ This Excel Utility can prepare at a time both of Form 16 Part B and Part A[ This Excel Utility can prepare One by One Form 16 Part A&B and Form 16 Part B for F.Y. 2016-17]

For Self-Employed

The maximum benefit you can avail under Sec.80CCD (1) is Rs.1,50,000 (including Sec.80C limit). Along with this Rs.50,000 under Sec.80CCD (1B). So total maximum benefit an individual can avail is Rs.2 lakh (where Rs.1.5 lakh will be part of Sec.80C limit).

Even though on paper it looks like maximum benefit available will be Rs.2 lakh. But under Sec.80C, you will have a lot of choices and few default options to save (like life insurance premium or PPF). Hence, never be in wrong belief that NPS will ALONE give you Rs.2 lakh tax benefit.

For salaried

You can avail the tax benefit under Sec.80CCD (1)+Sec.80CCD (1B) up to Rs.2 lakh. Along with that, you have another additional option to claim deduction under Sec.80CCD (2), which is unlimited and based on certain conditions. I explained the same in my above post.

NPS taxation while withdrawing or maturity

Long back, I wrote a complete blog post on new NPS withdrawal and maturity rules. However, when it comes to taxation, there is a need for some clarification. Reasons are as below.

NPS Taxation on retirement

Let us say you accumulated Rs.100 at retirement. In that, you are eligible to withdraw Rs.60 or 60% of such accumulated corpus. Remaining Rs.40 or 40% need to be purchased an annuity product.

In the lump sum withdrawal of Rs.60 or 60%, Rs.40 or 40% is tax-free. Remaining Rs.20 or 20% is taxable income in the year of withdrawal.

The income from an annuity will be taxed year on year as per your tax slab. So you are deferring the tax treatment for future years from the 40% annuity you will buy.

NPS Taxation on Pre-mature withdrawal

In this case, you are allowed to buy an annuity product from the 80% of accumulated corpus. So there is no confusion here as the annuity will be taxable income for your year on year.

The confusion is about 20% lump sum withdrawal. IT Department need to come out with clarity. The rules just say 40% of lump sum withdrawal from NPS is tax-free. However, in this particular case, the lump sum investment is 20%.

Hence, whether the whole 20% is tax-free (as it is less than 40% tax-free limit) or 40% of 20% is only tax-free (i.e. 8% from 20%). As of now, there is no clarity on this aspect.

NPS Taxation on Partial withdrawal

Partial withdrawal from NPS is allowed on certain conditions. I explained the same in my post “National Pension System (NPS)-New Partial Withdrawal and Exit Rules“.

There is no clarity about the tax treatment relating to this partial withdrawal. However, I feel such partial withdrawal will be taxed in the year of withdrawal as per subscriber’s income tax slab.

NPS Taxation in the event of death of subscriber

For Government, Employees-Nominee will be allowed to withdraw only 20% lump sum. The nominee must purchase the annuity from remaining 80%. However, in case the accumulated corpus is less than or equal to Rs.2,00,000 then his spouse (or nominee) can withdraw all the amount at once without any mandatory.

For others-Nominee will be allowed to withdraw 100% accumulated corpus. However, the nominee has a choice to buy an annuity too.

On December 11, 2016 by www.taxexcel.net

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