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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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Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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)
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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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
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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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.
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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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) ;
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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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
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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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.
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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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.
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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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
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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
Sreekanth Reddy says
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.
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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
Sreekanth Reddy says
April 1, 2016 at 11:46 am
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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
Sreekanth Reddy says
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..
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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
Sreekanth Reddy says
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,
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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
Sreekanth Reddy says
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
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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
Sreekanth Reddy says
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
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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
Sreekanth Reddy says
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
Income Tax Deductions FY 2016-17 / AY 2017-18 : Details http://www.relakhs.com/income-tax-deductions-fy-2016-17-a...
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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