Budget 2016-17 has been presented in Parliament. The Finance Minister has kept the Personal Income Tax slab rates unchanged for the Financial Year 2016-17 (Assessment Year 2017-2018).
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.
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;
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) 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 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, 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 upto 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 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 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:
(a) Dementia
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(d) Ataxia
(e) Chorea
(f) Hemiballismus
(g) Aphasia
(h) Parkinson’s Disease
Section 24 (B)
The interest component of home loans is allowed as 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 tax deduction. (Read: Understanding Tax Implications of Income from house property)
Section 80EE
This is a new proposal which has been made in Budget 2016-17. 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.
Section 80U
This is similar to Section 80DD. 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 HRA (House Rent Allowance).
The extent of tax deduction will be limited to the least amount of the following;
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 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 tax deduction.
There is no limit on the amount of interest you can claim as 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.
Conclusion
It is prudent to avoid last minute tax planning. Do not invest in unwanted life insurance polices or in any other financial products just to save taxes. It is better you plan your taxes based on your financial goals at the beginning of the Financial Year itself. Plan your taxes from April 2016 itself, instead of waiting until late December 2016 (or) January 2017.
It is OK to pay some taxes when you can not save or cannot invest in right financial products. But, do not invest just to save TAXES. The cost of buying wrong financial products may outweigh the cost of taxes. Tax Planning is not a goal but a tool. Remember “Tax Planning alone is not Financial Planning.”
Also, kindly understand the tax treatment of the selected investment products across the different investment stages (i.e., investment, accrual & withdrawal) and then invest.
I believe that the above list is useful for your Tax Planning purposes. The above ‘Income Tax Deductions 2016-17’ are applicable for financial year 2016-2017 (Assessment Year 2017-2018).
(Image courtesy of Stuart Miles at FreeDigitalPhotos.net)
You may like reading : How Income Tax Dept tracks High Value Financial Transactions?
This post was last modified on July 11, 2023 11:06 am
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View Comments
Hi Srikanth,
I home loan sanctioned on 26/03/2012. and i took possession on 06/12/2013. the interest which accrued in that period is about 125000/- which i dint claim till now.
i just want to know that can i divide 125000 in five equal parts and claim that in this financial year and coming financial years.
Dear Prakash,
You can not claim the previous years' PPI installments now in this fY.
However the installment which is applicable for this FY 2016-17 can be claimed in ITR AY 2017-18.
Sir
I am a state gOvt.Pensioner of kerala.aged 61.After eligible deductions of 150000/ under 80c,Medi claim (80D)Rs 15 895/ my tax laiability comes to Rs9000/-
1.can I deduct Rs .5000/under 87 a from this (total taxable income below 5 lakha)
2.Any other plan for me to save this tax
3.Can I claim addl Rs.5000/ for preventive health Check up in addition to mediclaim.
Dear Anilkumar Ji,
Kindly check the applicable ceiling limit in your case under Section 80D, kindly read this article..
Kindly use this IT dept's TAX Calculator, to check if 87A rebate can be claimed or not.
I (1 st time home buyer) have bought a flat in Feb'2017 . For FY 2016-17 , I have to pay (Principal amount : Rs. 8745.75 /- + Interest : Rs. 11756.25 /). So from INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' this interest amount will be deducted as " INTEREST ON BORROWED CAPITAL U/S 24(1)(VI)" .
But for FY 2017-18 , this interest amount is more than Rs. 2 Lakh. Upto 2 lakh I will show under INTEREST ON BORROWED CAPITAL U/S 24(1)(VI) as Rs. 2 lakh is maximum I can show under this head. For the Balance amount
, could I avail additional deduction under 80E for FY 2017-18 ?
Dear Ipsita ..Yes, can avail tax deduction u/s 80EE also. (Section 80E is for Deduction for interest on Education loan).
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.
Dear Reddy Sir
Kindly confirm, whether medical reimbursement received by state govt employee is taxable or exempt up to Rs 15000/-, in case of expenditure is upon dependent father of Individual (Senior Citizen)
Dear Ali,
TA - up to Rs 1600 pm is tax-exempt.
Medical reimbursement of Rs. 1,250 is exempt from tax and if it is part of the salary structure.
Read : Section 80D & Medical allowance - tax benefits
Dear Sir,
I would like to know, how much amount can be availed for 80C exemption for the tuition fees for my son, who is doing Bachelors. The Tuition Fees are INR 2,00,000=00 per annum (each semester 1,00,000=00). How much can be exempted under section 80C !!! Kindly guide me ASAP, Sir.. Thank you so much for your valuable time and response, which definitely serves purposes from many others like me, reading the above opinions and expert responses, Sir.. Much appreciated work, Sir...
Dear Minesh Ji,
It is up to Rs 1.5 Lakh can be claimed u/s 80c.
Thank you for your kind words.
Hi..
Does Fixed deposit comes in 80C ?
Dear Swati...Yes, 5 year tax saving FDs.
Is there any entertainment allowance under section 16(ii)?
Dear Kuzhali,
For private sector employee, it is fully taxable.
For govt sector employee, the taxable amount is total Entertainment allowance received minus least of below;
* 1/5th of basic salary.
* Rs 5000 (or)
* Actual allowance received
sir i had been on leave for two month due to which I did not get transport allowance and secondly transferred. intially i was getting 800 aas transport allowance and now i am getting 1600 as transport allowance. so how much transport allowance i can claim for rebate means actual or 19200.
Dear SANJAY ...It is actuals only (up to Rs 9600 pa).
Dear Reddy Sir
Whther TA received is exempt up to Rs 1600/- pm (19200/- yearly).... kindly correct me if I am wrong..
Further kindly clarify me Medical Reimbursement received by state govt employee during 16-17 is completely exempt or exempt up to Rs 15000/- for dependent parent of Individual.
your immediate response is highly appreciated.
Hi sir,
i joined one company, there they deduct HRA amount, but after 3 month i left that company, now i am working another company where they didnt provide HRA amount here(not deducted) for this fiscal year 2016-17, then here i can claim on that 80GG on this or not for HRA not getting now.
Please suggest me.
Thanks,
Manas
Dear Manas,
You must not have availed any HRA during the entire financial year. If you were employed for 1 month in the financial year (and availed HRA) and were self-employed during the remaining period, you cannot avail tax relief under Section 80GG.
I have paid Rs.5274/- towards individual personal accidental premium to Apolo Munic Health Insurance. Whether IT benifit is allowed on this.
Dear Debdas..Kindly note that personal accident policies do not have any tax benefits.
Sir,
My son in under going treatment in Govt hospital for Autism. where we should submit "FORM NO. 10-IA" I usually fill returns online. Is it a declaration or we have to post the document (xerox or original)
Dear Vishwanath Ji,
I believe that there is no need to upload or file this form along with your ITR, but kindly keep the document with you for future reference or to upload in your Employer's database (if salaried & required).
"Medical treatment expenses for the specified disease (Section 80DDB) : Medical Bills / expenditure incurred by way of medical treatment for a specified disease along with a certificate from a hospital in the prescribed form. (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 hospital only. This condition causes undue hardship to the persons intending to claim tax deduction. Now, CBDT (Central Board of Direct Taxes) has issued a notification relaxing this condition. Specialist Doctors working in Private hospitals also can issue a ‘certificate / prescription’ now). Download Form 10I."