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Tuesday, January 26, 2016

Revised Deduction Limits under the Income Tax Act 1961 for the Financial Year 2015-16(Assessment Year 2016-17)

Here is a quick update of the revised limit under various Income Tax sections that you must remember to claim for financial year 2015-16

1)Section 80D of Income Tax Act

Deduction limit on your medical insurance premium paid has been increased to Rs. 25,000 per annum from earlier Rs. 15,000 per annum

One can also claim a deduction of up to Rs. 30,000 for medical insurance premium paid for parents against Rs. 20,000 earlier.

In case of senior citizen, the limit has been revised to Rs. 30,000 per annum from earlier limit of Rs. 20,000.

2)Section 80CCD (1B) of Income Tax Act.

One can claim an additional deduction of Rs. 50,000 towards contribution made to New Pension Scheme (NPS)

This is apart from Rs. 1.5 lakh deduction available under Section 80C.

 Now, the combined deduction under Section 80C and 80CCD (1B) is Rs. 2 lakh.

3) Section 80DD of Income Tax Act.

One claim a deduction of Rs. 75,000 per annum under Section 80DD on the medical expenses incurred on a dependent relative with disability (more than 40 %  but less than 80 %) this year against Rs. 50,000 per annum till last year.

In case of severe disability (more than 80 per cent), you can claim Rs. 1.25 lakh per annum instead of Rs. 1 lakh per annum earlier, irrespective of the amount you incurred during the financial year

While claiming the deductions you will have to furnish a certificate from medical authorities

4)Section 80DDB of Income Tax Act

The deduction limit for expenditure incurred on specific diseases such as Dementia, malignanat cancers, AIDS and chronic renal failure has been increased to Rs. 80,000 per annum from Rs. 60,000 per annum in case of very senior citizen.

One can claim up to Rs. 80,000 or the amount actually spent whichever is lower.

5)Section 80U of Income Tax Act.

In case of a person with disability, the deduction limit has been increased to Rs. 75,000 for this year against the earlier limit of Rs. 50,000.

In case of severe disability the limit has been increased to Rs. 1.25 lakh from earlier limit of Rs. 1 lakh.

This is applicable where the tax payer himself suffers from a disability.

6)One can claim a deduction of up to Rs. 1,600 per month towards transport allowance provided by your employer to you. Till last year the limit was Rs. 800 per month.

Also, if the person is blind or orthopedically handicapped with disability of lower extremities, he or she can claim a deduction of up to Rs. 3,200 per month against earlier limit of 1600 per month

7)Deduction U/s 80-C(upto Rs 150000)
Deduction under section 80C (Maximum upto Rs.1.5 Lakh per annum)

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Deduction under section 80C (Maximum upto Rs.1.5 Lakh per annum)

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 8)Deduction U/S 80CCC towards contribution to a Pension Fund of LIC or IRDA Approved Insures  upto Rs 150000

9)Other Deductions


Under section 80CCD (1) of the Income-tax Act, 1961 if an individual, employed by any other employer (other than the Government), has paid or deposited any amount in a previous year in his account under a notified pension scheme [only the National Pension System (NPS) has been notified by the Ministry of Finance], deduction is allowed up to 10% of his salary. •Further, with effect from Financial year 2015-16, under section 80CCD (1B) an Individual employee can claim additional deduction up to Rs.50000 by contributing towards NPS. •Besides, under Section 80CCD(2) employee shall also get deduction in respect of employer's contribution towards his NPS account up to limit of 10% of his salary. •For this purpose, ‘salary’ includes dearness allowance having regard to the terms of employment but excludes all other allowances or perquisites. •Limit of deductions under sections 80C, 80CCC and 80CCD(1) is restricted to Rs.1,50,000. Please note that the Individual’s contribution under section 80CCD(1B) and employer’s contribution under section 80CCD(2) is not subject to the overall limit of Rs.1,50,000.

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Note

Income-Tax-Slab-for-FY-2015-16
 

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