Income Tax F.Y.2016-17 A.Y. 2017-18, Exemptions, Deductions and Rebate for Salaried Employees under Section 10, Section 24, Section 89(1), Chapter VIA, and Section 87A as per the Finance Bill 2016-17.

Section 80C – Subject to the overall limit of Rs. 1,50,000 under Section 80CCE.

For investments in specified schemes, saving instruments etc.U/s 80C

1) Life insurance premium for policy:

2) Contributions by an individual made under Employees’ Provident Fund Scheme

3) Contribution to Public Provident Fund Account in the name of:

4) Contribution by an employee to a recognized provident fund

5) Subscription to any notified security or notified deposit scheme of the Central Government. For this purpose, Sukanya Samriddhi Account Scheme has been notified vide Notification No. 9/2015, dated 21/1/2015. Any sum deposited during the year in Sukanya Samriddhi Account by an individual would be eligible for deduction. The amount can be deposited by an individual in the name of her girl child or any girl child for whom such an individual is the legal guardian.

6) Subscription to notified savings certificates [National Savings Certificates]

7) Contribution for participation in unit-linked Insurance Plan of UTI:

8) Contribution to notified unit-linked insurance plan of LIC Mutual Fund:
a) in the case of an individual, in the name of the individual, his spouse or any child of such individual
b) in the case of an HUF, in the name of any member thereof

9) Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full-time education of any 2 of his/her children

10) Subscription to notified schemes of (a) public sector companies engaged in providing long-term finance for purchase/construction of houses in India for residential purposes/(b) authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both

11) Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005)

12) Contribution by an individual to any pension fund set up by any mutual fund.

13) Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions

14) Subscription to any units of any approved mutual fund referred to in section 10(23D), provided the amount of subscription to such units is subscribed only in ‘eligible issue of capital’ referred to above. 21. Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance with a scheme framed and notified.

15) Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions)

16) 5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions)

Download Automated Excel Based Income Tax Preparation Software for Govt & Non-Govt Employees for F.Y.2016-17 [ This Excel Utility can prepare at a time Individual Salary Sheet + Individual Tax Compute Sheet + Individual Salary Structure for Govt & Non- Govt employees as per Govt & Non-Govt Salary Pattern + Automatic H.R.A. Calculation + Automatic Arrears Relief Calculation with Form 10e + Automatic Form 16 Part A&B and Form 16 Part B for F.Y.2016-17 ]

Employee's Salary Structure 

Tax Compute Sheet

Arrears Relief Calculation

Form 16

Section 80CCC – Subject to the overall limit of Rs. 1,50,000 under Section 80CCE

Contribution to certain specified Pension Funds such as LIC or other authorised Insurance Companies

Section 80CCD(1) – – Subject to the overall limit of Rs. 1,50,000 under Section 80CCE

Deduction in respect of contributions to National Pension Scheme / System (NPS) notified by Central Government

Limit : 10% of salary in case of employees, 10% of gross total income in case of others

Section 80CCD(1B)

Deduction in respect of the deposit under a pension scheme notified by Central Government (NPS) up to Rs. 50,000/-

Section 80CCD(2)

Deduction in respect of employer contributions to NPS – National Pension Scheme / System – This deduction is available over and above the Rs. 1.5 lakh limit

Section 10 (13A) – Exemption in respect of HRA:

Under Sec. 10(13A), an employee who is in receipt of House Rent Allowance (HRA) 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.

Exemption u/s 10(13A) is the least of the following

1. Actual amount of HRA received

2. 50% (for Chennai, Mumbai, Kolkata and Delhi) / 40% (for other places) of the Salary for the relevant period

3. Rent paid Less 10% of Salary for the relevant period.

Section 87A – Rebate of Income Tax for Taxable income up to Rs. 5 Lakh 

Finance Act 2016 provides for a rebate of Income up to Rs. 5000/- in respect of Persons who have Taxable not exceeding Rs. 5 lakh.

Section 10(14) – Transport Allowance and Children Education Allowance (CEA)

Under Section 10(14), the Budget FY 2016-17 lets you claim Rs. 19,200 tax exemption as transport allowance and Rs. 2,400 tax exemption as Children Education Allowance (CEA) in a financial year.

Section 24(b) – Home Loan

If you have taken a Home Loan, then you can claim a tax deduction on the interest component of the loan under Section 24(b). For self-occupied properties, you can benefit from deductions of up to Rs. 2,00,000.

Section 89(1) – Income Tax relief in respect of Arrears of Salary pertaining to previous years

If arrears of salary has been received in Financial year 2016-17 related to previous years then Relief of Income Tax can be claimed u/s 89(1) by accounting income from arrears in respective years on a notional basis.

Deductions allowed under Chapter VI-A of Income Tax Act

Deduction Limit – Sec 80CCE. As per Section 80CCE, a deduction can be claimed up to Rs. 1,50,000 for the payments / contributions made under Sections 80C, 80CCC and 80CCD excluding U/s 80CCD(2) and 80CCD(1B)

Section 80 CCG

The amount invested in listed shares covered by Rajiv Gandhi Equity Equity Saving Scheme. Deduction of 50% of total investment subject to a maximum of Rs. 25,000 is allowed for 3 consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed shares or list units of equity oriented funds are first acquired

Section 80D

Amount invested in Health Insurance

In the case of Individual, an amount paid: a) For self, spouse and dependent children: Up to Rs. 25,000 (Rs. 30,000 if specified person is a senior citizen or very senior citizen) b) For parents: additional deduction of Rs. 25,000 shall be allowed (Rs. 30,000 if the parent is a senior citizen or very super senior citizen) In the case of HUF, up to Rs. 25,000 (Rs. 30,000 if specified person is a senior citizen or very senior citizen).

The aggregate amount of deduction cannot exceed Rs. 60,000/- in the case of an individual.

Section 80DD

Expenditure incurred for the medical treatment of a dependent (spouse, children, parents, brothers and sisters of the individual) up to Rs. 75,000 (Rs. 1,25,000 in case of severe disability)

Section 80DDB

Expenditure incurred for medical treatment of specified diseases for self, or wholly dependent spouse, children, parents, brothers and sisters up to Rs. 40,000 (Rs. 60,000 in case of senior citizen and Rs. 80,000 in case of very senior citizen)

Section 80E

Interest paid on Educational Loan with no limit

Section 80EE

Interest on loan for acquiring residential house property sanctioned during the financial year 2016-17. The Housing Loan availed should be up to Rs. 35 lakh and should have been availed in the year 2016-17

Section 80G

Deduction in respect of donations to certain funds, charitable institutions, etc.

Section 80GG

Rent paid for residential accommodation from the income of Tax Payer / assessee who is not in receipt of HRA

Least of the following shall be exempt from tax: a) Rent paid in excess of 10% of total income*;

b) 25% of the Total Income; or

c) Rs. 5,000 per month.

Section 80 TTA

Interest on Savings Bank accounts subject to a maximum of Rs. 10,000

Section 80U

Exemption of income tax for an income up to Rs. 75,000 for persons with disability (Rs. 1,25,000 in case of persons with severe disability)Source:

 Incometaxindia.gov.in

On November 18, 2016 by www.taxexcel.net

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To start with, let the explain what exactly has changed in terms of taxation from last year (i.e. 2014-15):

Click here to download All in One TDS on Salary for Govt & Non-Govt employees for the Financial Year 2014-15 [ This Excel Utility can prepare at a time Tax Compute Sheet + Arrears Relief Calculation + HRA Exemption Calculation + Form 16 Part A&B and Part B ]

1. Tax slabs have been changed
2. Deduction limit under sec. 80C increased to 1,50,000 from earlier 1,00,000. PPF investment limit under sec. 80C also increased to 1,50,000
3. Exemption for interest paid on your housing loan has been raised to 2,00,000 from 1,50,000 earlier

All changes this budget have been beneficial for the tax payer. If you are already aware of all the provision for saving income tax, you can skip the remaining part and go directly to the income taxcalculator for FY 2014-15 to compute your income tax liability (or TDS) basis your salary or business income. Others, do read on to know all the different tactics you can use to save on income tax.

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.
1) In Case of General Assesses (Both Male & Female):

Income Bracket	Rate
0 to Rs. 2,50,000	0   %
Rs. 2,50,001 to Rs. 5,00,000	10 %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

2) In Case of Senior Citizens (Age above 60 years but below 80 years):

Income Bracket	Rate
0 to Rs. 3,00,000	0   %
Rs. 3,00,001 to Rs. 5,00,000	10 %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

3) In Case of Very Senior Citizens (Age 80 years and above):

Income Bracket	Rate
0 to Rs. 5,00,000	0   %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

* On final tax amount, a surcharge of 3 %
**No surcharge above 10 lacs.
***An additional surcharge of 10% will be applicable on persons whose annual income is above Rs. 1 crore. This surcharge will be applicable for only one year

Income Tax Exemptions: 

1) Section 80 C Limit  – Raised this year (to Rs. 1,50,000)

• 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
• Post Office SB
• Infrastructure Bonds
• Expenditure on Children Education (For upto 2 children only for full time education)
• Tuition fees (Only Tuition fees excluding Development Fees, Donations, etc.)
• Housing loan principal
• K.V.P ( Newly Added )

2) Section 80CCD - Unchanged 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.

3) Section 80 D – Unchanged this year

• Deduction of Rs. 15000/- 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. 20000/-

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	15,000	15,000	30,000
You and your family are less than 60 years & parents are above 60 years	15,000	20,000	35,000
You and your parents are of 60 years and above	20,000	20,000	40,000

4) Section 80DD – Unchanged 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. 50,000/- in case of normal disability and Rs. 1 Lakh in case of severe disability.

5) Section 80DDB - Unchanged this year

• Exemption given for expenditure incurred on specified disease or ailments such as cancer/aids.
• Maximum deduction allowed is Rs. 40,000/-. In case of Senior Citizens, maximum deduction allowed is Rs. 60,000/-

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.

6) Section 80E - Unchanged this year

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.

7) 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

8) Section 80U - Unchanged this year

• Deduction upto Rs. 50,000/- is allowed in case of Permanent Disability.
• In case of Permanent Disability exceeding 80%, maximum deduction allowed is Rs. 1,00,000/-.

9) Section 24(1)(vi) & Section 80EE - Raised 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).

11) Conveyance/Transport Allowance - Unchanged this year

Any Conveyance / Transport Allowance given to an employee is tax free upto Rs. 9,600 /- (No Supporting Bills required).

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)
   Calculate HRA Exemption U/s 10(13A) with Excel utility

14) Professional Tax - Unchanged this year

Any Professional Tax deducted from an employee’s salary can be reduced from the annual salary income to arrive at taxable salary.

15) Provident Fund - Unchanged this year

Provident Fund contributions (under section 80 C and subject to an overall investment limit of Rs. 1,50,000 ) deducted from an employee’s salary are tax exempt.

16)80CCG – Direct Equity Investment - Unchanged this year

Under ‘Rajiv Gandhi Equity Savings Scheme‘ – a new equity investor will be able to claim 50% of his investment in direct equity as deduction subject to maximum investment of Rs. 50,000 and provided his taxable income is below Rs. 10 lacs. The investment will be subject to 3 years lock-in.  
Government has notified this scheme (RGESS). Mutual funds and ETFs that invest in BSE100 or CNX 100 stocks or PSUs which are Navratna, Maharatna and Miniratna will qualify under this scheme. These investments can be traded over stock exchange after 1 year of investment. New equity investor has been defined as someone who has opened a Demat account but has not bought any securities till date of notification of this scheme (22 Sep 2012).

17) 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.

18) Section 87 A [Tax Rebate Rs.2,000/-  - Unchanged this year

On December 13, 2014 by www.taxexcel.net

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Click here to download Automated All in One TDS on Salary for Private Employees(Non-Govt employees) for the Financial Year 2014-15 ( This Excel Utility Can prepare at a time Income Tax Compute Sheet + Individual Salary Structure + Automated HRA Exemption + Form 16 Part A&B and Part B )

Budget 2014 was a big event this year as the expectations by the Central Finance Budget 2014 was very high and it's filled the high expectation to the tax payers. Here are some of the income tax rules which were changed into the budget and impact a common man directly.

1. Income Tax Exemption Increased from 2 lacs to 2.5 lacs

The basic exemption limit was raised by Rs 50,000 in this budget and now the new limit is Rs 2.5 lacs . So there is no tax to be paid upto income of Rs 2.5 lacs. For senior citizens, the new limit will be Rs 3 lacs. So the new tax slabs looks something like this

 

2.80C limit raised from 1 lacs to 1.5 lacs, 

This was a big relief for most of the people, as the old limit of Rs 1 lac in 80C was not enough for most of the people. There are too many things like EPF, PPF, Home Loan Principle amount, tuition fees, Life Insurance Premium, Tax Saving Mutual Funds and Tax saving FD and many more things, which gets 80C exemption.

Now with this exemption increase to 1.5 lacs, more motivation will be there for people to utilize this 80C limit. So if a person earns Rs 4 lacs, he/she can invest upto Rs 1.5 lacs in 80C, which lowers the taxable income to 2.5 lacs , which does not attract any income tax. So in best case, a person do not have to pay income tax upto Rs 4 lacs income with help of 80C investments done.

3. PPF limit raised from 1 lacs to 1.5 lacs

The limit for PPF investments was increase from 1 lacs to 1.5 lacs. This is going to be a great news for PPF fans and especially those who are investing in PPF in their children names, as the overall limit would increase for their family.

4. Home Loan Interest exemption raised from 1.5 lacs to 2 lacs,
This was again a big relief for salaried class, as a lot of people who have taken home loan pay much more than 1.5 lacs of interest per year. With the increase of limit from 1.5 lacs to 2 lacs, the extra saving is of tax on Rs 50,000 , which turns out to be around Rs 15,000 for those who are in 30% tax slab. Note that this is only applicable for self occupied house taken on home loan.

5. Capital Gains Tax on Debt funds raised from 10% to 20%

The capital gains tax on debt funds has been raised from 10% to 20% and the minimum holding period to get benefit has been raised from 12 months to 36 months. So what happened was that earlier, people in 20%-30% tax slab rate used to invest in debt fund for 12 months and got it taxed at 10%, which was a great alternative to fixed deposits (where you pay 30% tax , if you are in higher tax slab) . But now this cant be done . Those who are interest to understand this part.

Then vs Now – An example calculation of a person earning Rs 10 lacs

Below I have given an example of a person who earns Rs 10 lacs, and takes full benefit under 80C , Home loan Interest and other basic exemptions like HRA, Medical Bills, Medical Insurance premium etc and compared his situation from past year rules vs the new rules which came in new budget. It has been seen that he can save approximately Rs 30,000 additional tax. Have a look below

Download the Income Tax Calculator

An excel based Income Tax calculator with Form 16 Part A&B and Part B + HRA Calculation + Arrears Relief Calculation + Form 10E for FY 2014-15,which you can use for calculating your new income tax and also compare with past year and see how much saving you will make with new rules. Download the income tax calculator below. 
Click Here to Download the Income Tax Calculator All in One for FY 2014-15

On October 17, 2014 by www.taxexcel.net

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