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Sunday, 8 March 2015

Tax Deductions Available Under Various Sections For Financial Year 2015-16

Individuals whose Annual Income is above Rs 2,50,000/ p.a will be liable to pay Taxes on the earnings above the prescribed amount. Individuals earning below Rs 5,00,000/- p.a can avail Tax Credit up to Rs 2000/- on the Tax payable. Now we will look at the Tax Deductions available under the Income Tax Act and Sections applicable. We would also find out Investment and Saving options which could be availed.

 DEDUCTIONS U/S 80C

Deductions are available to the Individuals under Section 80C, 80CCD, 80CCC up to the extent Rs 1,50,000/-. These are now effectively clubbed under Section 80C with the aggregate deduction ceiling of Rs 1,50,000/-.


SAVING/INVESTMENT SCHEMES
RETURN ON INVESTMENT
LOCK IN PERIOD
Contribution to Employee’s Provident Fund (EPF)
Varies year to year (Generally between 8.25%-9.5%)approx
Till the Retirement
Public Provident Fund (PPF)
Varies year to year (Generally between 8.25%-9.5%)approx
15 years, Can be extended.
Equity Linked Saving Scheme (ELSS)
Varies as it is Market Linked.
3 years, Can be extended.
National Saving Certificate (NSC)
8%-9%
5 years.
Term Policies
Nil
5 years or More
Unit Linked Investment Plan (ULIP)
Varies as it is Market Linked.
5 years or More.
Life Insurance/Flexi Insurance Policies
4%-8%
Based on Maturity Term.
Sukanya Samriddhi Scheme
9.2%. To be declared by Govt Annually
Investment for 14 years, Maturity after 21 years.
Pension Schemes Issued by Life Insurance Companies
Varies with Companies and Policies
Generally 10 Years or More.
Senior Citizen Savings Scheme (SCSS)
9.3%
5 years.

DEDUCTIONS U/S 80 CCD (1b)

Deduction up to Rs 50,000 up and over the deduction U/S Section 80C of Rs 1,50,000/- is available on Contribution made to National Pension Scheme (NPS).

DEDUCTIONS U/S 80D

Further deduction up and above the Deductions availed U/S 80C & 80CCD is available U/S 80D on Health Insurance Premium. It covers the premium paid on the Health Insurance cover for self and family. Deduction of Rs 25,000/- can be availed for the premium paid for Self, Spouse and dependent children. Additional deductions upto Rs 30,000/-  is available on premium paid on the Mediclaim Insurance of the parents aged above 60 years. 

DEDUCTION U/S 80DDB

Deduction to the extent of Rs 40,000/- on Medical Expense of Self and dependent relative can also be availed. In case of very Senior Citizens the limit goes up to Rs 80,000/-.

DEDUCTIONS U/S 80E

Deduction is also available on the education loan for higher studies (Graduation or Post Graduation) in the fields of Medicine, Engineering, Management, or Science. The deduction is available from the 1st year and subsequently for next 7 years. Deduction available is Rs 40,000/- p.a on the EMI paid as principal cum interest.

DEDUCTIONS U/S 80G

Deductions are also available for the donations made to notified NGO’s, Charitable Institutions are eligible for 50% or 100% deduction as provided under the act. However the maximum limit to the deduction claimed is 10% of the Adjusted Gross Total Income after claiming other deductions.
DEDUCTIONS U/S 80GG
Deduction available in respect of House Rent Paid, the least of the following:
1.     Rent paid less 10% of the total income.
2.     Rs. 2000/- per month. (Maximum Deduction available is 24,000/-)
3.     25% of total income, provided that
Assessee or his spouse or minor child should not own residential accommodation at the place of employment, or anywhere else and is not receipt of House Rent Allowance.

DEDUCTIONS U/S 24(b)

Deductions up to Rs 2,00,000/- is available on the interest paid on the Loan availed for purchase/construction of self occupied House Property. However the acquisition and construction of such house property should be completed within 3 years from the end of Financial year in which Home Loan was taken. The sum should be borrowed on or after 01/04/1999 to be eligible for deduction.

DEDUCTION U/S 80DD & U

Deduction of Rs 75,000 U/S 80DD is available to meet the expenses and medical treatment of disabled dependent person. In case of severe disability (more than 80%) the Deduction limit is raised to Rs 1,25,000/-.
Deduction of Rs 75,000 U/S 80U is available to meet the expenses and medical treatment of Resident Individual (Self). In case of severe disability (more than 80%) the Deduction limit is raised to Rs 1,25,000/-.

DEDUCTION U/S 80TTA

Deduction from Gross Total Income up to a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account (not time deposits) with a bank, co-operative society or post office.

Link for Income Tax Rates and Slabs for the Financial Year 2015-16 is given below:-

Income Tax Slabs And Rate For The Financial Year 2015-16

Impact Of Income Tax For The Financial Year 2015-16

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