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.
Deduction Under Section 80C of Income Tax Act 1961 -
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
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
Health Insurance Premium paid and Maximum
Spouse, Dependent Children & Self
Parents (Dependent & Others)
All in the family are below 60 years of age
Upto Rs. 25000
Upto Rs. 25000
Yourself, spouse and children are below 60 years and
Any one of Parents is above 60 years
Upto Rs. 25000
Upto Rs. 30000
Yourself or spouse attained 60 years of age and
Any one of Parents is above 60 years
Upto Rs. 30000
Upto Rs. 30000
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
- Neurological Diseases where the disability level has been certified to be of
40% and above;
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(h) Parkinson's Disease
- Malignant Cancers
- Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
- Chronic Renal failure
- Hematological disorders
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
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
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
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
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.
"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
(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
(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
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 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.