Income Tax Deductions FY 2016-17 / AY 2017-18 : Detailsdocshare01.docshare.tips/files/31816/318165870.pdf · and new proposals with respect to Income Tax Deductions FY 2016-17. ...

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Exemptions for AY 2017-18

Income Tax Deductions FY 2016-17 : List ofimportant Income Tax Exemptions for AY2017-18

Last updated: March 8, 2016 | by Sreekanth Reddy — 20 Comments

SShhaarree tthhiiss aarrttiiccllee ::

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).

He has proposed to introduce or extend the

Tax Deduction limits under few Sections of

the Income Tax Act.

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.

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1 of 22 18/04/16 9:38 pm

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)


2 of 22 18/04/16 9:38 pm

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


3 of 22 18/04/16 9:38 pm

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.


4 of 22 18/04/16 9:38 pm

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) ;


5 of 22 18/04/16 9:38 pm

Chronic Renal failure

Hematological disorders

Hemophilia

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


6 of 22 18/04/16 9:38 pm

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.


7 of 22 18/04/16 9:38 pm

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.


8 of 22 18/04/16 9:38 pm

Understanding your Form 16 & other Tax related forms (Form 16A & Form 26AS)

How to save Capital Gains Tax on Sale of Land / House Property?

e-Sahyog : New Online Facility to resolve ‘Income Tax Returns’ mismatch issues

FY 2014-15 Income Tax Returns Filing : Tax Slabs & New ITR Forms

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?

Related Posts

SSrreeeekkaanntthh RReeddddyySreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner

(CFP), engaged in blogging, financial counseling & property consultancy for the last 6 years

through his firm ReLakhs Financial Services . He is not associated with any Financial product /

service provider. The main aim of his blog is to "help investors take informed financial decisions."

Connect With Me : Facebook Google+ Twitter LinkedIn

Comments

srinath says


9 of 22 18/04/16 9:38 pm

April 17, 2016 at 12:50 am

Dear Sir,

I’m purchasing property worth of 44 laksh. I have paid advance 4lkhs and

remaining 40 laksh going for home loan.

Bank going to sanction loan in a couple of days. The property is under

construction by the end of the year it will be handover to me. Registration of

property 4lakhs around.

Could you please answer few queries for the below.

1) Can I avail the tax exemption on 80C(home loan principal amount 1.5 lakh) &

Section 24 for Principal and interest on loan ( home loan interest 2lakh) ?

2) Can I avail Registration of property 4lakhs under 80C. ?

3) The very important one, can i avail 80EE section 50000 tax exemption. ?

Since the home loan 40 lakhs I am sure I cannot avail 80ee section, so thats why

I thought I should go 5 laksh personal loan and 35 laksh home loan so that I can

avail 80ee section 50000 tax exemption till next home loan tenure 20 years.

Please advise me in detail on 3rd query

Reply

Sreekanth Reddy says

April 18, 2016 at 3:35 pm

Dear srinath,

1 – If you get the possession in FY 2016-17 then yes you can claim tax

benefits for AY 2017-18 or FY 2016-17.

2 – Yes. But payment of stamp duty etc and possession of the house have

to happen in the same financial year (2016-17).

3 – Kindly calculate the net benefit that you are going to get. Tax

deduction (Rs 50k) Vs the high interest amount that you are going to pay

on personal loan. What if the govt discontinues this new section 80EE


10 of 22 18/04/16 9:38 pm

from next financial year??

Reply

D S Pandher says

April 3, 2016 at 9:04 am

Dear Sreekanth,

You are doing an amazing ‘Social Service’…Helping millions of hapless Indians

to manage their money and survive.

Kindly help me in planning my Sun-set Years –

1. I am 65 and self-employed with spare Rs.2,40,000/- per year to invest in MF

to build a Corpus in next 5-10 years for generating income by Systematic

Withdrawal Plan.

2. Please suggest 4(four) ideal MF to regular SIP/ Investment for Growth & Build

a 1Cr Corpus.

3. I have NO Loans/Liabilities, Living in own house and leading a healthy active

life.

4. I have Insurance & few FDs for support.

Thanks & Warm Regards,

Reply


April 4, 2016 at 1:22 pm

Dear Darshan Pandher,

Kindly note that I have already replied to your query @ List of best

investment options. Suggest you to continue the discussion in the same

post.


11 of 22 18/04/16 9:38 pm

Reply

Raji says

April 1, 2016 at 12:39 pm

Sir,I work for Govt.of Kerala. Went through the page for calculating anticipatory

Income Tax Statement for the FY 2016-17.Found very useful & informative.

Thank you so much.

Reply

Chirag says

March 30, 2016 at 3:55 pm

Dear Sir,

Can you provide me information related to 80 G Tax benefits

Actually i have a big group working in different companies with different

salaries .

Do you have any calculations any information or link which will Show the

Employee How much benefit he will get if the Employee donates X amount to

an NGO . I need to mail my group this information .

Can you please Help me . Thanks !

Looking forward.

Best Regards,

Chirag.

Reply


April 1, 2016 at 11:46 am


12 of 22 18/04/16 9:38 pm

Dear Chirag..As of now I do not have this data/required calculator. Kindly

consult a CA.

Reply

kunal k says

March 25, 2016 at 3:05 pm

Dear Sir ,

I am planning to put 1lakh in PPF on 1st april , to get benefit of returns from the

start of the year , reaming my employer dedcuts epf . so 80c , i will get 150000

tax benefit .

having said that , i was planning to start sip for long term 25 years horizon ,

example may be in Axis LTE mf . but now i dont require tax deduction benefit .

what do you suggest . To go with ELSS or some other fund .

Is the decision correct to go for PPF , or should i go for MIP dividend option >

example BSL mip ii growth option .

Thank you for your valuable time

Reply


March 26, 2016 at 11:23 am

Dear kunal,

Kindly start your investment plan by identifying your financial goals first,

tax planning should not be the starting point. So, let me know your

financial goals..

Read :

How to create a solid investment plan?

Think beyond TAXES when investing..


13 of 22 18/04/16 9:38 pm

Reply

pratik says

March 18, 2016 at 12:34 am

section 80EE benefit is available for under construction property?, if yes what

will be treatment for first home purchased before 1 April 2016 (under

construction), but loan was sanction in 1 April 2016 to 31 March 2017 ?

Reply


March 19, 2016 at 10:22 am

Dear Pratik..Yes you can avail the tax deduction of Rs 50,000 u/s 80EE

under the said scenario.

Reply

Girish Suryawanshi says

March 9, 2016 at 10:45 am

Thanks for sharing article in very simple language which is very helpful to learn,

Reply

Sanket says

March 9, 2016 at 12:53 am

Dear Sir,


14 of 22 18/04/16 9:38 pm

I am a regular reader of your blog and find it very helpful for tax planning and

investments. I have a doubt.

I am a Govt employee. My gross salary for FY 2015-16 is Rs. 4,60,000/-. The

mandatory deduction for NPS from my salary is Rs. 46,000/- and the same

matching amount is contributed by the employer. I have also invested Rs.

1,40,000/- in PPF and ELSS funds. Please tell me how much deduction can I

claim:-

(1) Only Rs 1,50,000/- under Section 80C or

(2) Rs. 1,40,000/- under Section 80C + Rs. 46,000/- under Section CCD (1B) i.e.

total Rs. 1,86,000/-

Your guidance will be very helpful to me.

Thanks!

Reply


March 9, 2016 at 10:29 am

Dear Sanket,

There seems to be some confusion in the financial community regarding

this.

However, as per my understanding, you can claim Rs 1.5 L u/s 80c &

80ccd(1), Rs36,000 u/s 80ccd (1b) & the entire employer contribution

80ccd (2).

Reply

Milind K says

March 8, 2016 at 6:23 pm


15 of 22 18/04/16 9:38 pm

Dear Sir,

Your blog is very useful,helpful of every taxpayer. We feel and trust on your

blog.

Sir, I would like take advice on following case :

1 ) I have purchased flat in dec2006 amt Rs 12.00 Lacs and same sold in Jun15

amt Rs 33.00 Lacs.

How much long term capital gain tax attract ? how I can save capital gain tax ?

If I invested in Agricultural land on name of my wife and constructed house on

it, it’s permissible ?

2 ) One small flat on name of my wife but housing loan on my name, in this

situation if purchased small flat/resale flat on my name, then I will be entitled

for taking a benefit as per new budget i.e deduction of Rs 50000/-etc.

Sir, your valuable advice very helpful to me as well my family.We will thankful

and oblige for your advice.

Milind K

New Panvel

Mumbai

Reply


March 9, 2016 at 10:22 am

Dear Milind,

1 – Kindly read: How to save capital gain taxes on sale of property?

2 – If you are the owner/co-owner of the property, you can not claim tax

benefits on home loan.

Reply


16 of 22 18/04/16 9:38 pm

Chandrashekhara H says

March 8, 2016 at 6:10 pm

Thankyou So much…

Reply

Sreedhar says

March 8, 2016 at 4:51 pm

Hi Srikanth,

Very sweet and short. I appreciate your framing of sentences to make every one

can understand.

I think you could take example of 5 or 10 lakh per anum and how much they can

save by planning well ahead.

May be this is the right time…..for financial planning next year. Having said, i

strongly believe ONLY to save the tax, we should not purchase the products.

Good luck !!!

Reply


March 9, 2016 at 10:19 am

Dear Sreedhar,

Thank you for your appreciation.

I have purposefully note provided any example, thought I would be giving

too much importance to invest in all possible products just to save taxes.

Reply


17 of 22 18/04/16 9:38 pm

NN GOVINDAMURTHY says

March 29, 2016 at 12:36 pm

It is Very Useful to those who are tax payers

Reply

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