Income Tax Deductions 2015 : Budget 2015 / 2016

Budget 2015 has been introduced in Parliament. The Finance Minister has kept the Personal Income Tax rates unchanged for the Financial Year 2015 /2016 (Assessment Year 2016-2017).

He has proposed to introduce or extend the Tax Deduction limits Under few Sections of the Income Tax Act.

Let us understand all the important sections and new proposals with respect to ‘Income Tax Deductions 2015’. This list will help you in planning your taxes.

Income Tax Deductions 2015Income Tax Deductions 2015

Section 80c

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

Section 80CCC

Contribution to annuity plan of LIC (Life Insurance Corporation of India) or any other Life Insurance Company for receiving pension from the fund is considered for tax benefit. The maximum allowable Tax deduction under this section is Rs 1.5 Lakh.

Section 80CCD

Employee can contribute to Government notified Pension Schemes (like National Pension Scheme – NPS). The contributions can be upto 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-slaried. 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 tax deduction under Section 80CCD (2). The ceiling limit of 1.5 Lakh u/s 80CCD is not applicable on employer’s contribution.)

Section 80D

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, deduction is allowed for Rs 30,000 toward medical expenditure.

Section 80DD

You can claim up to Rs 75,000 (increased from the existing Rs 50,000) for spending on medical treatments of your dependents (spouse, parents, kids or siblings) who have 40% disability. It is also been proposed to increase the limit of deduction from Rs 1 lakh to Rs 1.25 lakh in case of severe disability.

Section 80DDB

An individual (less than 60 years of age) can claim upto 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 proposed as Rs 60,000 and for very Senior Citizens (above 80 years) the limit is Rs 80,000

Section 24 (B)

You can claim upto Rs 2 Lakh as 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 tax deduction.

Section 80U

This is similar to Section 80DD. (Tax deduction is allowed for the tax assessee who physically and mentally challenged)

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.

It is prudent to plan your taxes from April 2015 itself, instead of waiting until late December 2015 (or) January 2016. I believe that the above list is useful for your Tax Planning purpose.

The above ‘Income Tax Deductions 2015’ are applicable for Financial year 2015-2016 (or Assessment Year 2016-2017).

(Image courtesy of Stuart Miles at FreeDigitalPhotos.net)

( You may like reading my articles onBudget 2015 – Highlights” & “Income Tax slabs & rates FY 2015-2016“)

  • Ashams says:

    what is the limit for tax deduction. my gross salary is 252000 pa. pls clarify me.

  • Sanjay says:

    For claiming LTA exemption of Rs. 29710/- in 2015, which ITR can be filled.

  • Mamata says:

    Hi,
    I’ve downloaded ITR-4 and 2 utilities but upon opening the utility, it displays a completely blank utility, the header tabs like new, open, save, save draft, etc are shown though. If my extraction path would have been wrong then we couldn’t view the utility environment either! So i deleted the whole zip folder and downloaded the utilities again. But the problem is still the same. Pls let me know what’s my mistake and is anybody else facing the same issue?

    Thanks
    Mamata

    • Dear Mamata,
      Just now I have downloaded the ITR 4 Excel Utility and it looks fine.
      So, mostly the issue can be with your MS Excel software. Kindly try downloading it on other system.

    • Debi says:

      Try “Extract all” from right click options, it usually works.

  • KESHAVA says:

    MY SALARY IS 2,40,000 PER ANNUM + I EARN AROUND 50,000 from interest on savings per annum…
    i have invested 1lakh in PPF AND 10,000 IN lic IN THIS YEAR 2015-16… HOW MUCH TAX I HAVE TO PAY.
    MY AGE IS 43

  • Trikesh says:

    HI,
    I am going to buy flat.

    I have paid stamp duty and registration challan on 30 march 2016 and we did registration process on 2 April 2016.
    so can i use it for the year 2016-2017 declaration of tax or now i have to fill it for last year 2015-2016 TDS, retrun .

    • Dear Trikesh,
      Very tricky question 🙂
      Kindly go through the below points, can be useful;

      * Deductions can only be claimed in the year of actual payment. Suppose you bought house and paid Stamp Duty and Registration Charges in December 2014, than you can claim deduction for these expenses u/s 80C in the financial year 2014-15 only. Expense for earlier year cannot be claimed.
      * Deductions can only be claim, if expenses are for new residential house property for self and not for a resold property.
      * For claiming deduction, you must possess the house also i.e. Payment for under-construction is not allowed. In simple words both payment of expenses and possession of the house must be in the same fiscal year for claiming expenses.

  • tapan deb says:

    this is really nice

  • M R Kumar says:

    You have mentioned that under 80C an a deduction of 1,50,000 is available if invested under SCSS (Post office Senior Citizen Savings Scheme). In Oct 15 I have invested more than this amount under SBI Senior Citizen Saving Scheme. Is this scheme the same as SCSS (Post office Senior Citizen Savings Scheme)SCSS (Post office Senior Citizen Savings Scheme) and would a deduction be available under 80C. I invested this amount out of maturity amount of SBI FDs.

    Let me mention that you are doing a wonderful job in clarifying he confusion in IT rules.

    • Dear Mr Kumar ..Yes, its the same. The amount deposited in SCSS is also allowed to be claimed as a deduction under Section 80C. You may check with the SBI too.

  • Jhumu says:

    Hi,
    I’m working in an IT company. Currently I’m saving Rs.150,000 under 80C and just to save more, I’ve opened NPS account last year. But now I’m thinking to close this account. Would it be right? And if so, is there any other savings options? I don’t have any house loan or don’t want to save under health insurance.
    Would be great if you can suggest some better option.
    Thanks,
    Jhumu Sarker

  • Shivaji Jadhav says:

    Hi, I would like to know that can employer deduct the amount u/s 80U from employees income or not?
    Thanks.

    • Dear Shivaji,
      To avail a deduction under Section 80U, no bills or receipts are required. What is required is a valid certificate from a medical authority certifying the disability.

  • NATARAJA.R.N. says:

    Sir,

    Can you clarify the following my doubts?
    1-How much house rent is accepted by the IT Dept?
    My gross salary in 2015-2016 Rs.4,26,000.00
    Add bonus 2015-2016 Rs. 30,000.00
    So the total income in the AY Rs.4,56,000.00
    Exemption Rs.2,50,000.00
    So i have to submit exemption expenses like House rent,Tuition fees,LIC and Shriram life insurance Premium and how much house rent eligible to show in IT?Actually i am paying per month HR is Rs.4,000/- and for the above year for Rs.48,000/- can we show in HR A/c?

    Pl clarify.

    Thank you,

    Nataraja.R.N.

    • Dear NATARAJA,
      There is no limit to show the rent paid as such, but the exemption on HRA is subject to certain conditions as below;
      To The Extent Of The Minimum Of The Following Three Amounts :
      1) Actual House Rent Allowance Received By The Employee
      2) Excess Of Rent Paid For The Accommodation Occupied By Him Over 10 % Of The Salary.
      3) 50% Of Salary Where The Residential House Is Situated At Mumbai, Calcutta, Delhi Or Chennai And 40% Of The Salary Where The House Is Situated At Any Other Place.

  • KumarStone says:

    Hi,

    I have a fiber optic cable internet connection (Broadband), this connection is with out a telephone number, there is only customer number. My employer is not accepting the bills as the broad band connection does not have a telephone number. Can you please through some light on this as there are many who have such issue and there is no information on the web. I want to save some money and dont want tax to be computed on the allowance that i get from the company.

    Regards
    Kumar

  • P. Yogameenakshi says:

    Hi Sreekanth
    I m a state govt. Employee of TN govt. and come under CPF. My share under 80CCD 1 doesn’t exceed 1.5 lakhs. I want to know whether I can claim 2lakhs deduction under 80C and 80CCD put together. I don’t have any savings in 80CCD 1b in any NPS schemes approved by the central govt. other than CPF.

  • S. A. Bhat says:

    Hi,
    I have one query which I could not get cleared even searching it on internet. It is , I am a govt. employee and come under NPS system I want to know wether the income tax exemption under 80C ( Rs. 150,000) includes the exemption to employer’s contribution (80CCD 2) or the exemption to employer’s contribution is above the exemption granted under 80C (Rs. 150,000) as I have seen our bill clerk including the employer’s contribution into the gross salary and then deducting Rs.150,000 under Sec. 80 C. I will be very thankful if you will clear this doubt to me.
    Thanks

    • Dear Mr Bhat,
      If your employer also contributes to Pension Scheme, the whole contribution amount (10% of salary) can be claimed as tax deduction under Section 80CCD (2). The ceiling limit of 1.5 Lakh u/s 80CCD is not applicable on employer’s contribution.

  • Vikas Barthwal says:

    Hi Sreekanth

    First of all – Thank You So Much from my end as i just saw your responses above to help people and
    give advice regarding tex related queries.

    Sir..I also have a query which nobody could give clear answer.I have tried to search regarding my
    query on internet but no proper solution is there,,So now after searching on net i landed here and
    hope that you will have a proper and accurate answer to my query.

    My query is that – I am going to buy a 4 years old house.On 22nd february 2016 i am going to tehsil
    for registration and to pay stamp duty and mutation as well for the same.This is not an authorized property.
    Rather this was a free-hold plot in which a house was constructed and now we are buying it.Let me tell you
    that i am also taking loan of 20 lack for this house.

    SO MR. SREEKANTH …I WANT TO ENQUIRE WHETHER I CAN GET EXEMPTION FROM MY TAX
    FOR THE YEAR 2015-2016 IF I SUBMIT MY REGISTERY+STAMP DUTY+MUTATION DOCUMENT….?????????????????????
    THE AMOUNT WHICH I HAVE TO PAY IN REGISTERY + STAMP DUTY + MUTATION = 1,45,000

    ALSO MY CTC YEARLY IS = 5,38,000

    I will eagerly be waiting for your detailed reply

    Thanks & Regards
    Vikas Barthwal

    • Dear Vikas,
      Kindly let me know what type of Loan are you taking?

      Mutation Fees is part of the cost of house property and as such is eligible for deduction under sec 80c, besides the Registration & Stamp duty costs.

      • Vikas Barthwal says:

        I had applied for home loan and day before yesterday( 18th february 2016 ) i got intimation
        from bank that your loan has been disbursed.I just wanted to know if i will get exemption on
        registery(20500) + Stamp duty ( 125000) on this 4 years old house which was built by owner
        on a free hold land.

  • Sivakumar says:

    Hello,
    My two sons Tuition fee Rs: 2,50,00/= . Is it possible to deduct this amount in 80C. My spouse is also working. please tell me how to deduct this tuition fee amount.

    Regards,
    Sivakumar.v

    • Dear Sivakumar,
      A tax assessee can claim max up to Rs 1.5 Lakh as tuition fee u/s 80c. I am sure you may have other investments to be claimed as tax deduction u/s 80c.
      So, suggest both of you to divide this amount and claim accordingly.

  • ela says:

    sir, I am tamilnadu govt. employee and i am in cps. So 10% of amount is detected towards CPS from basic pay. the samount is given by the govt as per NSC . My qns.are
    1. am in New Pension Scheme?
    2. Can I avail Rs.50000 in 80ccd-2?

  • Praveen Goswami says:

    Dear sir ; I have taken car loan amont 6 lac 31.12.2015 is that any tax binifit for that ? I have properitership firm pls tell me
    Thanks & Regards
    Praveen Boswell
    Greater noida

    • Dear Praveen,
      Deductions from payable tax through a car loan can be availed only if you are a business man and declare the profit or capital gains earned from your business. Another condition attached to this is that the vehicle has to be purchased in the name of your business. In that case, you get exemption on the interest as well as depreciation of the vehicle. Under these conditions, you can include the interest paid for your car loan for tax exemption.

  • Uttam .S says:

    I am proprietor for small company, advice which is best for tax exemption plans.

  • Nishant says:

    Hi Sreekanth,

    I am investing Rs 1000/- in Systematic Investment Plan in “RELIANCE GROWTH FUND – GROWTH PLAN GROWTH OPTION” for past 7 yrs or so. When I took this SIP, my agent told me that it was not tax saving plan but only a kind of investment for me. Few days back, someone told me that if I invest in any SIP for more than 3yrs continuously then this SIP investment can be treated TAX exempted for me. Please advise !!

    • Dear Nishant,
      Kindly understand the difference between TAX SAVING & TAX EXEMPTION.
      Any capital gains on redemptions of Equity mutual funds after 1 year of holding the units are exempted from income taxes.
      If you invest in Tax saving mutual funds (ELSS funds) which have a lock-in period of 3 years, you can claim the invested amount as tax deduction u/s 80c (tax saving). If you redeem these units after 3 years then any gain made on such redemptions is tax exempted.

  • Nikhil Wasnik says:

    Hi Sreekanth,

    I have a question about regarding tax calculation on medical allowance(Rs. 15000 paid by employer) if I don’t fall under tax bracket( income < 2.5L) and if no bills are submitted to employer. Will TDS be deducted on medical allowance, 30% of 15k.?

    Thank you – Nikhil

  • sanjiv says:

    l have spend 20000 rs for my wife’s delivery treatment .
    can l get tax benefit for it.

  • Mrs. S. Bhattacharjee. says:

    Dear Sir,
    My husband is a Govt. Servant(W.B.) and he has been taken an amount of Rs.2(two) lac as Xpress Credit Loan from S.B.I. for repairing and renovation of his own house on June,2013 after intimating to his D.D.O. in written.
    Now my question is it (i.e. principal @ Intt.) may be deducted/relief from his income in respect of Income Tax or not? Also mention rule/sec. no. please.
    If answer is yes then how the previous amount ( for the F.Y. 13-14,14-15) will be adjusted from his Income Tax Return.
    For your co-operation, I ever grateful to you.
    Thanking you.

    • Dear Mrs S.Bhattacharjee,
      SBI’s Express Credit Loan is a Personal Loan.
      If a house property is acquired, renewed, repaired or reconstructed using the personal loan the interest amount up to Rs 2 lakh can be claimed for self-occupied properties as per Section 24 (B). However, there are no tax benefit for Principal repayments and also you can claim previous years tax benefits in your case.
      Kindly preserve the bills (repairs/renovation) to prove that you have used the loan amount for these purposes.

  • NARASIMHA PRAKASHA says:

    I have paid LIC 1st premium of Rs.2.00 lakhs in December 2015 towards Life Insurance and next due is December 2016 and it will continue like this for another 5 years. Can I get tax benefit for the whole amount of Rs.2.00 lakhs for financial year 2015-16 because the 1st premium is paid in December 2015 (yearly). Please clarify because we are already in the verge of January 2016. Please clarify.

  • NIRANJAN MONDAL says:

    I want to know House Repairing Loan’s Interest deduction from Gross Income. Yes or No. Please answer or Rules for it.

    • Dear NIRANJAN..You can claim only Rs.30,000 tax deduction if home loan is for house renovation/repairs.

      (Tax benefit on interest paid can be availed for loans taken for repair of the house too but tax benefit, in such a case, shall be limited to Rs 30,000 per financial year.)

  • kiran says:

    Sir i am the state govt employee of Andra pradesh.My doubt is my contribution 10% of salary is comes under 80CCD(1B) or 80C or Both.
    please reply

  • Venkatesh says:

    Hi, I would like to know the new procedure to declare the children tuition fees for tax exemption. I am told that we can’t submit the proof before submitting the return. We should declare the Tuition fee in our annual return, then claim for tax benefit. Is that correct? Thanks.

  • MANAS PANDA says:

    Please leave your number for the further details

  • siddharth says:

    nice chat

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