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
Dear sir,
I am(indian resident) a research scholar in an indian govt university receiving:
Fellowsip: Rs 378000/- pa
HRA: Rs 76500/- pa
How much is the taxable income from the above?
and how can I save the tax?
I am staying in rented house costing Rs 6200/-pm as rent
Dear Ankit,
Kindly note that Research fellowships, grants received from universities are all tax-exempt.
Kindly read this article, click here....
thanks
then is it require to declare that income(fellowship+hra) under any other head (like income from other sources)?
if it is required to declare it, under which section I can get the tax exemption?
Dear Ankit ..There is no need to file tax return.
Thanks
Sir,
I have deposited following amount in the shape of fee of nsit new delhi (Affiliated to University of Delhi ) for the academic session 16-17 of my son. :-
tuition fee Rs 23700
Institutional fee Rs 34500
non govt. component Rs.17200
examination fee Rs.2020
mark sheet + form Rs.210
total amount Rs.77630
Kindly clarify how many amount will be tax free in the above fee.
thanking you sir,
Dear prasad Ji,
I believe that you can claim only tuition fee u/s 80c.
thank your sir,
p n pd.
DEAR SIR,
MANY THANKS FOR YOUR VALUABLE ADVICE. I WOULD LIKE TO KNOW THAT HOW CAN I GET I.T DEDUCTION IN INVESTING IN A ELSS FUND (EITHER IN A LUMP SUM AMT. OR IN A SIP)? PL. EXPLAIN IN DETAIL.
YOUR EARLY REPLY IS HIGHLY SOLICITED.
Dear KAUSHIKI ..You can just submit MF statement which reflects your investments in ELSS fund to your employer (if salaried), else you can just claim the investment amount in section 80c when filing your ITR.
Read : IT declaration & investment proofs.
DEAR SIR,
MANY THANKS FOR YOUR EARLY REPLY.
BUT I CAME TO KNOW FROM A WEBSITE THAT ONLY 50% OF AMT. INVESTED IN A ELSS FUND IS ELIGIBLE FOR TAX DEDUCTION, IS IT RIGHT?
YOUR COOPERATION IS HIGHLY SOLICITED.
Dear Kaushiki..It is wrong. 100% (up to Rs 1.5 Lakh) can be claimed.
sir,
under 80D CAN I DEDUCT FULL AMOUNT AS PER THE RECEIPT or half of it for eg if the bill contains Rs 2040 for 2d echo and blood test can i deduct total 2040 or half 0f it pl clearifi about 80g also
Dear Dr sowbhagya,
Upto Rs 5000 can be claimed for health check-ups u/s 80D.
Kindly read: Section 80D tax deduction.
Under which section I will get deduction for Medical Reimbursement and what is the Maximum Limit. I am getting Rs 28500/- towards hospitalization expenses. please advice me
Dear vikash ..You are referring to medical allowance..Kindly read this article : Section 80D tax deduction..
Dear Sreekanth ji,
Can a person claim deduction under 80DD and 80DDB for the same ailment?
Thanks,
Kanwal
Dear Kanwal ..I am not sure about this.
Dear Sir, Mr.Sreekanth ji, what is the procedure and rules for calculating HRA exemption for those who submits rent receipts for the financial year 2016-17. I heared some amendments issued by Govt. of India for this fy 2016-17 during December 2016 for this.
Dear Krishna Rao,
I am assuming you are referring to new Form 12BB
Mr.Sreekanth,
I am a government employee and coming under New Pension Scheme.
Well, clerks of our department seems to have little knowledge about NPS. Hence, we all new employees end up paying more taxes.
Here, I want to enquire about the actually amount I can claim exemption from my total salary.
In 2016-17, I have invested 1,50,000 (1.5 lacs) in PPF and which come under Section 80 C and Rs 54,888 (total) were deducted under NPS from my actual salary throughout the last financial year. Hence, total saving stated in my annual income statement given to me through my clerical wing was Rs 2,04,888/- and this was stated without mentioning any sections {80c, 80 c (1b)} in my annual salary slip. So, they said maximum limit for tax exemption is Rs 1.5 lacs only. Therefore, I end up paying additional tax on remaining amount of Rs 54,888/-.
So here I am seeking you guidance whether am I eligible for tax ememption of Rs 1.5 lacs only or Rs.15 lacs under Section 80C and additional Rs 50,000 under Section 80c (1b) - Total 2 lacs.
Apart from this, private CA told me that they couldn't help me because my clerical wings haven't mentioned under which section they are deducting these saving. So, kindly send me links of all possible government notification regarding these tax exemption along with your INSIGHT ABOUT MY PROBLEM.
Many many thanks in advance.
With best wishes,
Ramandeep Singh
Dear Ramandeep,
You can claim up to Rs 50,000 under Section 80CCD (1b)on investments in NPS, along with Rs 1.5 Lakh u/s 80c.
Kindly do check with your employer, if they are deducting the contributions under 80 ccd (1b) or not.
Under which section I will get deduction for Medical Test and what is the Maximum Limit. This is other than Rs.15,000/- Medical Reimbursement.
Dear Hitesh ..Can be claimed under Section 80D.
Read: Section 80D - tax benefits.
What about 80 CCF (RS 20000)?
Plz reply
Dear Rose ..I believe that 80 CCF exemption is not available for FY 2016-17/AY 2017-18.
Dear Sreekanth,
The link you provided by you is for the FY 2015-2016. If they released the same for FY 2016-2017, Please let me know
Thanks.
Dear Sateesh,
Request you to kindly go through this link, which says it is Rs 5000 for AY 2017-18.
Link : https://goo.gl/831Y2K
Dear Sateesh..Kindly check this link...