Download Advance Tax Calculator for the Assessment Year 2016-17 with new Amended as per Finance Budget 2015
Income Tax Exemptions and
deductions, give you plenty of opportunities to save tax. By using wisely
these exemptions and deductions, you can reduce your tax out-go. In this post,
I am listing the available exemptions, and deduction under income tax act.
Allowances Exempted Under Section 10 of Income Tax Act 1961
1. House Rent Allowance (HRA)
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 exempt the rent from income tax. However, your employer must pay the
house rent allowance.
Exemption
of HRA is a minimum of these three.
Actual
HRA received.
Rent
paid less 10% of salary.
40%
of Salary (50% in case of Mumbai, Chennai, Kolkata, Delhi). In this case, salary is basic plus
dearness allowance (basic+DA).Download HRA Calculator
Leave Travel Allowance :- LTC or LTA is exempted if the same is actually spent
Transport Allowance
You daily go
to your office or workplace from you 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. As per the Finance Budget 2015 Raised this tax exemption is Rs 1600/- Per Month.
Children Education Allowance
Children
Education allowance in 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 Allowances [ For One Children Rs. 300 P.M.]
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.
Income Tax Exemption on Interest Paid on Housing Loan U/s 24B
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 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 the construction should complete within 3
years.
Tax Deduction Under Section 80C
The
Government wants to encourage some certain types of investments and expenses.
To achieve this goal it gives the benefit of tax deductions. There are many
investments and expenses under section 80C, 80CCC and 80CCD. However, the total
deductions under this section are limited to Rs 1.5 lakh.
·
Employee
Provident Fund
·
Pension/
Annuity Schemes
·
Life
insurance premium
·
Tax
Saving mutual fund (ELSS)
·
Home
loan principal payment
·
Tuition
fees of children
·
PPF
Account Contribution
·
National
Saving Certificate
·
Tax-saving
fixed Deposit
·
Sukanya
Samriddhi Scheme ( For below 10 Years Girl Child)
·
Post
office time deposits
Section 80CCC: Deduction For Annuity Plan
You can also
get a deduction for the annuity plan of insurance companies. There are some
limitations on this deduction.
·
You
can’t contribute more than 10% of your salary or gross income.
·
You
can’t enjoy the deduction of more than Rs 1 lakh in a year.
Section 80CCD(1) : Contribution For Pension Plan
Similar to
annuities, contribution in pension plans is also eligible for tax deduction.
For example contribution to National Pension Scheme (NPS) will get deduction
benefit under this rule. It is also
limited to 10% of salary or 10% gross income (if not salaried).
Section 80CCD(2): Contribution To Pension Plan By employer
This section
gives you extra tax saving opportunity. If your employer contributes into your
pension plan, it would be also tax-free. This contribution does not come under
the overall limit of 1.5 lakh.
Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)
This scheme also gives you the extra
tax saving. To avail this benefit, you must be the first-time investor in the
share market. Your annual income should not be more than Rs 10 lakh. You can
invest up to Rs 50,000 under this scheme. However, the tax deduction would be
available for the 50% of your investment. So, if you invest Rs 50,000, you will
get the tax deduction of only Rs 25,000. There is some mutual fund scheme which
is designed for RGESS. However, due to the complex rules, it could not become popular.
Section 80D: Medical Insurance Deduction
Maximum Limit for general Rs.
25,000/- and Sr.Citizen above 60 Years old Rs. 30,000/- [ Raised As per Finance
Budget 2015]
Section 80E: Deduction on Loan for Higher Studies
Like the
home loan interest, one can also claim income tax deduction for education loan
interest.
You
must take education loan from a financial institution.
You
can avail this tax deduction maximum of 7 years.
You
can take the benefit of this deduction only for the higher education.
You
can take this benefit only for the education of self, spouse or children. If
you are the legal guardian of a student, you can also take this benefit.
Section 80G: Deduction for Donations
The donations specified in Section 80G are
eligible for deduction. The deduction may of 100% of donation or 50%, It
depends upon the type of receiver.
Section 80GG: Deduction on House Rent Paid
This
deduction is for those, who don’t get the house rent allowance from their
employer. Such person can avail this deduction according the specified rules.
Deduction is
the least of
Rent paid less 10% of total income
Rs.
2000/ month, i.e. Maximum Deduction available is
24,000. 25% of total income
There are
some conditions for this benefit.
·
Assessee
or his spouse or minor child should not own residential accommodation at the
place of employment.
·
He
should not get a house rent allowance (HRA).
·
He
should not have self occupied residential premises in any other place.
Section 80TTA: Saving Account Interest Deduction
Interest
earned on a saving account is not added in taxable income, if it is less than
Rs 10,000 in a financial year.
Section 80U: Deduction For Disabled
Under
section 80U a person with disability gets extra deduction from his/her taxable
income. Such person can deduct Rs 75,000 from the taxable income. In case the
disability is severe, the deduction is up to Rs 1,00,000. To avail this
deduction one should obtain a certificate from the government doctor.
U/s 87A :-
Tax Rebate Rs.2,000/- who’s taxable Income less than 5 Lakh.
