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Income Tax Exemptions for FY 2016-17 and list of deductions, rebates and benefits for AY 2017-18.

As per Budget 2016-17, the following are the exemptions, deduction, rebates etc available for tax payees.

 

Section 80C Rs. 1.50 Lakh

 

Section 80E No Limit

 

Section 80CC Rs. 1.50 Lakh

 

Section 80EE Rs. 50000

 

Section 80CCD(1b) Rs. 50000

 

Section 80G 10% of Income

 

Section 80D Rs 25k - Rs. 30k

 

Section 80GG Rs. 60000

 

Section 80DD Rs75K/Rs 125K

 

Section 80TTA Rs. 10000

 

Section 80DDB Rs.40k/60k/80k

 

Section 80U Rs. 75K/Rs 125K

 

Section 24B Rs. 2 Lakh

 

Section 87A Rs. 5000

 

Deduction Under Section 80C of Income Tax Act 1961 - Investments

Maximum deduction under section 80C has been retained as Rs. 1,50,000/- only. The following are the investment schemes in which deduction under section 80C can be claimed.

- Public Provident Fund (PPF)
- Employees' Provident Fund (EPF)
- Five year Fixed Deposit with Bank or Post office in Tax saving scheme
- National Savings Certificates (NSC)
- Equity Linked Saving Schemes (ELSS Mutual Funds)
- Tuition Fees of Children
- Post office Senior Citizen Savings Scheme (SCSS)
- Principal repayment amount of Home Loan
- National Pension System (NPS)
- Life Insurance Premium (LIC Premium Paid)
- Sukanya Samriddhi Account Deposit Scheme

Deduction Under Section 80CC of Income Tax Act 1961 - Contribution to annuity plan of LIC

Maximum amount upto Rs. 1,50,000/- for contribution to annuity plan of LIC (Life Insurance Corporation of India) or any other Life Insurance Company for receiving pension from the fund.

Deduction Under Section 80CCD of Income Tax Act 1961 - Contribution to Government notified pension schemes

Contribution made to Government notified Pension Schemes (like National Pension Scheme - NPS). The contributions limit is upto 10% of the salary (or) Gross Income and Rs 50,000 additional tax benefit u/s 80CCD (1b) is also available.

The 10% of salary limit is applicable for salaried individuals and Gross income is applicable for non-salaried. 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).
 

 

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.

Deduction Under Section 80D of Income Tax Act 1961 - Health Insurance Premium

Health insurance premium paid upto Rs. 25,000/- can be deducted Deduction u/s 80D.

Amount of deduction allowed for Senior Citizens is Rs 30,000.

For 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.

Chart showing eligibility of deduction under section 80D

 

Description

 

Health Insurance Premium paid and Maximum Deduction

 

Section 80D

Total Deduction

 

Spouse, Dependent Children & Self

 

Parents (Dependent & Others)

 

All in the family are below 60 years of age

 

Upto Rs. 25000

 

Upto Rs. 25000

 

Rs. 50000

 

Yourself, spouse and children are below 60 years and

Any one of Parents is above 60 years

 

Upto Rs. 25000

 

Upto Rs. 30000

 

Rs. 55000

 

Yourself or spouse attained 60 years of age and

Any one of Parents is above 60 years

 

Upto Rs. 30000

 

Upto Rs. 30000

 

Rs. 60000


Medical checkup expenses to the extent of Rs 5,000/- per family can be claimed as tax deductions. This is not over and above the individual limits as explained above. (Family includes: Self, spouse, dependent children and parents).

Deduction Under Section 80DD of Income Tax Act 1961 - Amount spend for dependants

Deduction allowed for amount spend for dependents (spouse, parents, kids or siblings) who have 40% disability is Rs 75,000.

In case of severe disability the tax deduction limit of upto Rs 1,25,000

Deduction Under Section 80DDB of Income Tax Act 1961 - Amount spent for specified critical ailments.

Amount spent for specified critical ailments an individual (less than 60 years of age) can claim upto Rs 40,000. This deduction 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:

- Neurological Diseases where the disability level has been certified to be of 40% and above;
(a) Dementia
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(d) Ataxia
(e) Chorea
(f) Hemiballismus
(g) Aphasia
(h) Parkinson's Disease

- Malignant Cancers
- Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
- Chronic Renal failure
- Hematological disorders
- Hemophilia
- Thalassaemia

To claim this deduction, you have to submit Form no 10-IA.

Deduction Under Section 24B of Income Tax Act 1961 - Interest paid on housing loan

- Self occupied property - Deduction of Rs. 2,00,000 is allowed

- Property is a let-out - The entire interest amount

Deduction Under Section 80E of Income Tax Act 1961 - Interest paid on Education loan

Deduction under section 80E is allowed for interest paid on loan taken for higher studies (after completing Senior Secondary Exam). This loan should have been taken for higher education for assessee, his spouse or his children or for a student for whom he is a legal guardian. Repayment amount of Principal part 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.

Deduction Under Section 80EE of Income Tax Act 1961 - New home purchase

As per the new proposal which 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.

- 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.

Deduction Under Section 80G of Income Tax Act 1961 - Donations and contributions

Upto 10% of the income can be contributed to certain relief funds and charitable institutions. This 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.

Deduction Under Section 80GG of Income Tax Act 1961 - House rent paid by self employed professionals

Self employed professionals can claim house rent expenses incurred under Section 80GG. Exemption for House rent paid under Section 80GG will be lowest amount of the following:

Calculation of HRA Exemption under Section 80GG

1. Rent paid minus 10% of adjusted total income

2. Rs. 5000 per month (from FY 2016-17) earlier Rs. 2000 per month

3. 25% of adjusted total income

Calculation of Adjusted total Income Under Section 80GG

Gross Total Income

Less:

Short Term Capital Gain of 10% category

Long Term Capital Gain

Deduction under Section 80C to 80U (except 80GG) and income of Foreign Company.

Deduction Under Section 80TTA of Income Tax Act 1961- Interest received on saving bank

Deduction under Section 80TTA from gross total income of an individual or HUF, is 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.

Deduction Under Section 80U of Income Tax Act 1961 - Disability

Any person being a resident (Indian citizen or foreign national), who, at any time during the previous year, is certified by the medical authority to be a person with disability or severe disability is eligible for deduction under section 80U. No bills or receipts are required to avail deduction under section 80U. A valid certificate from a medical authority certifying the disability is sufficient. Separate forms need to be filled for mental illnesses and all other disabilities. For illnesses such as autism or cerebral palsy form number 10-IA additionally needs to be filled

Medical Authorities who can certify Under Section 80U

-A Neurologist with an MD in Neurology.
-For children, a Paediatric Neurologist having an equivalent degree.
-A Civil Surgeon or Chief Medical Officer (CMO) of a government hospital.

Disability meaning


"Person with disability" means a person suffering from not less than forty per cent of any disability as certified by a medical authority;

The disabilities are those which are specified in "The Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995".

"Disability" may be -

(I) Blindness refers to a condition where a person suffers from any of the following conditions, namely:-

(i) Total absence of sight. or
(ii) Visual acuity not exceeding 6160 or 201200 (snellen) in the better eye with correcting lenses; or
(iii) Limitation of the field of vision subtending an angle of 20 degree or worse;

(II) Low vision - "Person with low vision" means a person with impairment of visual functioning even after treatment or standard refractive correction but who uses or is potentially capable of using vision for the planning or execution of a task with appropriate assistive device;

(III) Leprosy-cured- "Leprosy cured person" means any person who has been cured of leprosy but is suffering from-

(i) Loss of sensation in hands or feet as well as loss of sensation and paresis in the eye and eye-lid but with no manifest deformity;
(ii) Manifest deformity and paresis; but having sufficient mobility in their hands and feet to enable them to engage in normal economic activity;
(iii) Extreme physical deformity as well as advanced age which prevents him from undertaking any gainful occupation, and the expression "leprosy cured" shall be construed accordingly;

(IV) Hearing impairment- Hearing impairment" means loss of sixty decibels or more in the better ear in the conversational range of' frequencies;

(V) Loco motor disability- "Loco motor disability" means disability of the bones, joints muscles leading to substantial restriction of the movement of the limbs or any form of cerebral palsy,

(VI) Mental retardation- "Mental retardation" means a condition of arrested or incomplete development of mind of a person which is specially characterized by sub normality of intelligence;

(VII) Mental illness- "Mental illness" means any mental disorder other than mental retardation;

Severe Disability meaning
Severe Disability is described as a person with eighty per cent or more of one or more aforementioned disabilities.

The benefit of deduction under this section has also been extended to persons suffering from autism, cerebral palsy and multiple disabilities.

Medical authority

Medical Authority means any hospital or institution specified in Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 by notification by the appropriate Government.

Deduction Under Section 87A of Income Tax Act 1961 - Deduction for assessees having less than Rs. 5 lakh income.

All assessees who are earning below Rs 5 lakh, can save an additional Rs 5,000 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).

If the 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.

   
 
 

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