Download Automated All in One Income Tax Preparation Excel Based Software for Financial Year 2016-17 and Assessment Year 2017-18 ( Prepare at a time Tax Compute Sheet + Individual Salary Structure + Individual Salary Sheet + Form 12 BA + Automatic H.R.A. Exemption Calculation + Form 16 Part A&B and Form 16 Part B)
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;
1. Life Insurance Premium: You can get the deduction by depositing or paying life insurance premium in the previous year. You must note here that premium paid on behalf of wife/husband/child or any member of the family were assessed in an HUF. Child includes adult children also, Thus, the deduction is available in respect of premium paid on a policy on the life of a married daughter.
2. Provident Fund & Public Provident Fund: You can claim deduction under section 80C for the amount deposit in provident fund also. The annual contribution up to Rs.1,50,000 is eligible for deduction under section 80C. In this section, you can get the total deduction up to Rs. 1,50,000, if your total contribution in PF Rs. 1,50,000 and another contribution (PPF, LIC, ULIP, etc.) is 50,000 or any amount then you will get up to a maximum of Rs.1,50,000 u/s 80C.
3. National Saving Certificates (NSC): You can claim deduction under section 80C for the amount deposit in national saving certification along with PPF/LIC/ULIP up to a maximum of Rs.1,50,000 accrued during the year. There is no TDS deduction for repayment of NSC. Interest accrued during the year (except for the last year) shall be deemed to be reinvested and shall also qualify for deduction u/s 80C.
4. Bank Term Deposit Schemes: Amount invested in bank term deposits along with PPF/LIC/NSC/ULIP etc. up to a maximum of Rs.1,50,000 is also eligible for deduction under section 80C. The maturity period for bank term deposit schemes is 5 years.
5. Post Office Time Deposit Schemes: You can also opt for post office time deposit to get deduction under section 80C up to Rs.1,50,000. You must note that the deduction is available only to the first holder.
6. Mutual Fund Schemes: Some of the schemes of mutual funds are eligible for deduction u/s 80C .The income from mutual funds is also fully exempted u/s 10 (35).
7. NABARAD Rural Bonds: The deduction is also available under section 80C for a subscription to notified bonds issued by National Bank for Agriculture and Rural Development.
8. ULIP (unit-linked insurance plan): The deduction is also eligible for the amount deposit in the name of himself, his/her wife/husband or his child, and an HUF in the name of its members to any Unit Linked Insurance Plan of UTI.
9. Tuition Fees: You can claim the deduction of paying the tuition fee of your two children. Here, you should note that tuition fees eligible paid to any university, college, school or other educational institution situated in India. However, any development fees or donation or payment of similar nature shall not be eligible for deduction.
· Section 80CCD: Employee can contribute to Government notified Pension Schemes (like National Pension Scheme – NPS).
Deduction under this section is only for individual not for HUF’s. The contributions can be up to 10% of the salary (or) Gross Income and Rs 50,000 additional tax benefit u/s 80CCD (1b) was proposed in Budget 2015. In budget 2016, on withdrawal from the NPS account up to 40% of the accumulated balance shall be exempt from tax and the remaining would be taxed as per the income tax slab in the year of receipt.
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 (attained the age of 60 years and above) it is Rs 30,000. For very senior citizen above the age of 80 years who are not eligible to take health insurance, they shall be eligible for medical expenditure up to Rs. 30,000 towards medical expenditure.
Preventive health check-up (Medical checkups) expenses to the extent of Rs 5,000/- per family (Self, spouse, dependent children, and parents) can be claimed as tax deductions. Please note, this is not over and above the individual limits as explained above.
· Section 80DD: You can claim up to Rs 75,000 for spending on medical treatments of your dependents, who have 40% disability. The tax deduction limit of up to Rs 1.25 lakh in case of severe disability can be availed.
· Section 80DDB: An individual whose age is less than 60 years can claim up to Rs 40,000 for the treatment of specified ailments (such as AIDS, cancer, and neurological diseases). This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens (attained the age of 60 years and above) 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.
· Section 24 (B): The interest component of home loans is allowed as a deduction under Section 24B for up to Rs 2 lakh in case of a self-occupied house.
· Section 80EE: This is a new proposal which has been made in Budget 2016-17. The 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: If you claim deduction u/s 80DD then you can not claim under this section. A 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 House rent allowance.
The extent of tax deduction will be limited to the least amount of the following;
· Rent paid minus 10% 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. But the deduction is not allowed for donations made in cash exceeding Rs 10,000.
· Section 80E: If you take any loan for higher studies, 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 a tax deduction.
There is no limit on the amount of interest you can claim as a 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).
· 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.