Tax Planning – How to save income tax in FY 2016-17 as per new Finance Budget 2016,With Automated Income Tax Form 16 Part A and B and Part B for F.Y.2015-16

To start with, let the  explain what exactly has changed in terms of taxation from the year (i.e.AY 2017-18) As per Budget 2016:

  1. Tax slabs have not changed, as same as the Previous Financial Year 2015-16
All changes this budget have been beneficial for the tax payer. If you are already aware of all the provision for saving income tax, Others, do read on to know all the different tactics you can use to save on income tax.

Income Tax Slabs for F.Y.2016-17 & A.Y.2017-18

1) In Case of General Assesses (Both Male & Female):
Income Bracket
Rate
0 to Rs. 2,50,000
0   %
Rs. 2,50,001 to Rs. 5,00,000
10 %
Rs. 5,00,001 to Rs. 10,00,000
20 %
Above Rs. 10,00,000
30 %
2) In Case of Senior Citizens (Age above 60 years but below 80 years):
Income Bracket
Rate
0 to Rs. 3,00,000
0   %
Rs. 3,00,001 to Rs. 5,00,000
10 %
Rs. 5,00,001 to Rs. 10,00,000
20 %
Above Rs. 10,00,000
30 %
3) In Case of Very Senior Citizens (Age 80 years and above):
Income Bracket
Rate
0 to Rs. 5,00,000
0   %
Rs. 5,00,001 to Rs. 10,00,000
20 %
Above Rs. 10,00,000
30 %

Income Tax Exemptions:  for F.Y. 2016-17

1) Section 80 C Limit  – No Change this Financial Year 2016-17

  • Deduction on premium paid for a life insurance policy, taken after 1 April 2012, will be allowed only if yearly premium is less than 10% of sum assured.  If its more than 10% then it will be not eligible for deduction u/sec. 80C
  • ELSS (Mutual Fund)
  • PPF (upto Rs. 1,50,000)
  • EPF
  • FD for 5 years
  • Pension Plans
  • NSC
  • Sukanya Samriddhi Account ( Minor Girl Child Scheme) Max Rs. 1.5 Lakh
  • Post Office SB
  • Infrastructure Bonds
  • Expenditure on Children Education (For upto 2 children only for full time education)
  • Tuition fees Maximum allowed is Rs. 1,50,000
  • Housing loan principal
  • Deferred Annuity
  • Approved Super Annotation Fund
  • 80CC Raised Up to Rs. 1,50,000 [ Pension Fund ]

2) Section 80CCD – No changed this year

Deduction under this section can be claimed only if the contribution to your NPS account is made by your employer and the deduction is limited to a maximum of 10% of your basic salary. Returns on NPS are tax free, but withdrawal is still taxable. The deduction under sec 80CCD is over and above the deduction available under sec 80C.

3) Section 80 D –No changed this year

Deduction under section 80D
  • Deduction of Rs. 25000/- is allowed if the same is paid as premium for Medical Insurance taken for self / dependents or towards preventive health check-up (max Rs. 5000). In case any of self / dependents is a senior citizen, the deduction allowed is Rs. 30000/-

4) Section 80DD – No changed this year

Deduction under section 80DD
  • Exemption given for expenditure made for a disabled dependant towards Medical Treatment/Training/Rehabilitation. It also includes the LIC/Insurance premium paid towards maintenance of such dependant.
  • Maximum deduction allowed is Rs. 50,000/- in case of normal disability and Rs. 1 Lakh in case of severe disability.

5) Section 80DDB – No changed this year

Deduction under section 80DDB
  • Exemption given for expenditure incurred on specified disease or ailments such as cancer/aids.
  • Maximum deduction allowed is Rs. 80,000/-. In case of Senior Citizens,
  • List of ailments covered:
(i) Neurological Diseases where the disability level has been certified to be of 40% and above,
  1. Dementia ;
  2. Dystonia Musculorum Deformans ;
  3. Motor Neuron Disease ;
  4. Ataxia ;
  5. Chorea ;
  6. Hemiballismus ;
  7. Aphasia ;
  8. Parkinsons Disease ;
(ii) Malignant Cancers ;
(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
(iv) Chronic Renal failure ;
(v) Hematological disorders :
  1. Hemophilia ;
  2. Thalassaemia.

6) Section 80E – No changed this year

Deduction under section 80E
Deduction is allowed for repayment of interest component of Higher Education loan. All education after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.

7) Section 80G – No changed this year

  • Contribution to exempt charities – 25/50/75/100% depending on the charity and as per approval
  • 100% exemption on donation to political parties

8) Section 80U -No changed this year

  • Deduction upto Rs. 75,000/- is allowed in case of Permanent Disability.
  • In case of Permanent Disability exceeding 80%, maximum deduction allowed is Rs. 1,25,000/-.

9) Section 24B & Section 80EE  – Changed this year Only U/s 80EE

  • Housing loan interest. Maximum allowed limit raised to – Rs. 2,00,000 (for loans taken after 1 April 1999. For loans before that Maximum Investment Limit was 30,000).

  • Additional deduction of Rs. 1.5 lac will be applicable to persons taking first home loan of up to Rs. 25 lacs for property worth upto Rs. 40 lac. For such persons Rs. 1.5  lac available under this new section 80EE).
10) Superannuation  Unchanged this year
Any contribution made by a company to superannuation fund up to Rs. 1,00,000 tax free in the hands of the employee.

11) Conveyance/Transport Allowance – No changed this year

Any Conveyance / Transport Allowance given to an employee is tax free upto Rs. 1600 /- P.M. & Rs. 3200/- P.M. for Phy.disable persons.

12) Medical Allowance – Unchanged this year

Any Medical Allowance given to an employee is tax free upto Rs. 15,000 /- (Supporting Bills required).

13) HRA – Unchanged this year

Any House Rent Allowance given to an employee is tax free up to the minimum value of the following conditions (subject to – when an employee can produce rent paid receipts from landlord for the period and if the employee has not availed of tax exemptions for home loan interest / principal repayment):
  1. 50% of Annual Basic (40% of Annual Basic in case of non-metros)
  2. Actual HRA received
  3. Rent Paid – (10% of Annual Basic)
    Calculate HRA Exemption U/s 10(13A) with Excel utility

14) Professional Tax – Unchanged this year

Any Professional Tax deducted from an employee’s salary can be reduced from the annual salary income to arrive at taxable salary.

15) Provident Fund – Unchanged this year

Provident Fund contributions (under section 80 C and subject to an overall investment limit of Rs. 1,50,000 ) deducted from an employee’s salary are tax exempt.

16)80CCG – Direct Equity Investment – Unchanged this year

Under ‘Rajiv Gandhi Equity Savings Scheme‘ – a new equity investor will be able to claim 50% of his investment in direct equity as deduction subject to maximum investment of Rs. 50,000 and provided his taxable income is below Rs. 10 lacs. The investment will be subject to 3 years lock-in.  
Government has notified this scheme (RGESS). Mutual funds and ETFs that invest in BSE100 or CNX 100 stocks or PSUs which are Navratna, Maharatna and Miniratna will qualify under this scheme. These investments can be traded over stock exchange after 1 year of investment. New equity investor has been defined as someone who has opened a Demat account but has not bought any securities till date of notification of this scheme (22 Sep 2012).

17)80GG – House Rent Paid who have not get HRA:- – Changed this year, the Max. Rs. 60,000/- P.A. or Rs.500/- P.M.


18) Section 80TTA – Savings Bank Interest – Unchanged this year

No tax will be charged on interest earned on balance in savings bank account subject to a maximum of Rs. 10,000 per year.

18) Section 87 A [Tax Rebate Rs.2,000/-  – Changed this year Max Rs. 5000/- as Previous Year was this Rebate Rs. 2,000/-

19) Employees Provident Fund ( E.P.F.) & Provident Fund (P.F.) for Non Govt employees :- E.P.F. & P.F. and N.P.S. WITHDRAWN IS TAXABLE 


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