Income Tax Deductions for FY
2016-17 (AY 2017-18)
List of important Income Tax
Exemptions
Tax Deduction limits under few
Sections of the Income Tax Act. The important sections and new proposals with
respect to Income Tax Deductions FY
2016-17. This list can help you in planning your taxes.
Income Tax Deductions FY
2016-17
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:
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 Saving 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) 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:
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
1.
Hemophilia
2. Thalassaemia
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.
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.
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;
Rent paid minus 10 percent the adjusted total income.
Rs 5,000 per month.
25 % of the total income.
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.