Tuesday, 4 October 2016

Changes in Income Tax Rules as per the Finance Budget 2016-17 & A.Y 2017-18

Income tax exemptions 2017-18, income tax exemptions for salaried employees,income tax exemptions for fy 2017-18, income tax exemptions under section 80,income tax exemptions on housing loan, income tax exemption limit, income tax exemption for disabled persons.

Changes in Income Tax Rules as per the Finance Budget 2016-17 & A.Y 2017-18



  1. There has been no change in the income tax slabs for the Financial Year 2016-17 & Assessment Year 2017-18.
  2. For people with net taxable income below Rs 5 lakh, the tax rebate has been increased from Rs 2,000 to Rs 5,000 u/s 87A. This would benefit people who have net taxable income between Rs 2.7 Lakhs to Rs 5 Lakhs.
  3. Additional exemption for first time home buyer up to Rs. 50,000 on interest paid on housing loans. This would be applicable where the property cost is below Rs 50 Lakhs and the home loan is below Rs 35 lakhs. The loan should be sanctioned on or after April 1, 2016.
  4. Tax Exemption u/s 80GG (for rent expenses who do have HRA component in salary) has been increased from Rs 24,000 to Rs 60,000 per annum.This is a good move to align the exemption amount with today’s rent and keep the section relevant.
  5. For people with net taxable income above Rs 1 crore, the surcharge has been increased from 12% to 15%
  6. Dividend Income in excess of Rs. 10 lakh per annum to be taxed at 10%
  7. 40% of lump sum withdrawal on NPSat maturity would be exempted from Tax. This rule now also applies to EPF. So now in the case of EPF income tax would be applicable on 60% of the corpus of maturity.
  8. Presumptive taxation scheme introduced for professionals with receipts up to Rs. 50 lakhs. The presumptive income would be 50% of the revenues.

All in One TDS on Salary for Govt & Non-Govt employees for F.Y.2016-17 & A.Y.2017-18 

1.Section 80C/80CCC/80CCD
These 3 are the most popular sections for tax saving and have a lot of options to save tax. The maximum exemption combining all the above sections is Rs 1.5 lakhs. 80CCC deals with the pension products while 80CCD includes Central Government Employee Pension Scheme.
You can choose from the following for tax saving investments:
  1. Employee/ Voluntary Provident Fund (EPF/VPF)
  2. PPF (Public Provident fund)
  3. Sukanya Samriddhi Account
  4. National Saving Certificate (NSC)
  5. Senior Citizen’s Saving Scheme (SCSS)
  6. 5 yearsTax Saving Fixed Deposit in banks/post offices
  7. Life InsurancePremium
  8. Pension Plans from Life Insurance or Mutual Funds
  9. NPS (New Pension Scheme)
  10. Equity Linked Saving Scheme(ELSS – popularly known as Tax Saving Mutual Funds)
  11. Central Government Employee Pension Scheme
  12. Principal Payment onHome Loan
  13. Stamp Duty and registration of the House
  14. Tuition Fee for 2 children
2.Section 80CCD(1B) – Investment in NPS
Budget 2015 has allowed additional exemption of Rs 50,000 for investment in NPS. We have done a complete analysis and concluded that it would be beneficial for you to discard this benefit and invest after-tax money in a good equity mutual fund.
Download All in One TDS on Salary for Central Govt Employees for F.Y.2016-17 & A.Y.2017-18 
3.Payment of interest on Home Loan (Section 24/80EE)
The interest paid up to Rs 2 lakhs on home loan for the self-occupied home is exempted u/s 24. There is no limit for home given on rent.
Budget 2016 has provided additional exemption up to Rs 50,000 for payment of home loan interest for first time home buyers. To avail this benefit the value of the home should not exceed Rs 50 lakhs and loan should not be more than Rs 35 lakhs.

4. Payment of Interest on Education Loan (Section 80E)

The total interest paid on education loan can be claimed as tax exemption. There is no upper limit for the same.

5. Investment in RGESS (Section 80CCG)

Deduction Up to Rs 25,000 (50% of the amount invested) is allowed if you make the investment in preapproved stocks and mutual funds in Rajiv Gandhi Equity Savings Scheme (RGESS). This is available to first-time equity investors subject to certain conditions.

6. Medical insurance for Self and Parents (Section 80D)

You can get the tax deduction up to Rs 60,000 by paying the medical insurance premium for self, your dependents, and your parents. There is also sub-limit of Rs 5,000 for the preventive medical checkup.

7. Treatment of Serious disease (Section 80DDB)

You can claim deduction up to Rs 80,000 for treatment of certain diseases like AIDS, renal failure, etc for self or dependents.
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

  1. Malignant Cancers
  2. Full Blown Acquired Immune-Deficiency Syndrome (AIDS) ;
  3. Chronic Renal failure
  4. Hematological disorders
  5. Hemophilia
  6. Thalassaemia
8. Physically Disabled Tax-payer (Section 80U)

Physically Disabled Tax-payer can get tax exemption up to Rs 1.25 lakhs u/s 80U

9. Physically Disabled Dependent (Section 80DD)

You can claim deduction up to Rs 1.25 lakhs for maintenance and medical treatment of Physically Disabled dependent.
           To claim this deduction, you have to submit Form no 10-IA.

10. Donations to Charitable Institutions (Section 80G)

Deduction up to Rs 40,000 is allowed for Donation to certain charitable funds, charitable institutions, etc.

11. Donations to Charitable Institutions (Section 80GGA)

Deduction up to Rs 1 lakh is allowed for donations for scientific research or rural development

12. Donations to Charitable Institutions (Section 80GGC)

Deduction up to Rs 60,000 is allowed for donations to political parties.

There are no changes proposed in the income tax basic esmetion limits/slabs for individuals/HUF etc. They remain same as in FY 2015-16
Thus the the basic exemption slabs/limits for FY 2016-17 AY 2017-18 are as under:
 (a)For Individuals (both male or female) HUF, AoP or BoI:
Income Slabs
Rates
Up to Rs. 250000/-
Nil
From 250001 to Rs. 500000
10%
From 500001 to Rs. 1000000
20%
Above Rs. 1000000
30%

(b)   Senior Citizens (60 years or more but less than 80 years)
Income Slabs
Rates
Up to Rs. 300000/-
Nil
From 300001 to Rs. 500000
10%
From 500001 to Rs. 1000000
20%
Above Rs. 1000000
30%

(c)Super Senior Citizens (80 Years or more)
Income Slabs
Rates
Up to Rs. 500000/-
Nil
From 500001 to Rs. 1000000
20%
Above Rs. 100000
30%
Notes:

Rebate section 87A for FY 2016-17 AY 2017-18 is over and above the above mentioned Slabs    Read more>>  
Surcharge – has been increased from 12% to 15& if the 
  total income   exceeds Rs. 1 crores
Education Cess on income-tax- 2%
Secondary and Higher Education Cess- 1%
- See more at: http://abcaus.in/incometax/incometax-basic-exemption-slab-limits-fy2016-17-ay2017-18-individual-huf.html#sthash.IAy5ajZJ.dpuf


There are no changes proposed in the income tax basic esmetion limits/slabs for individuals/HUF etc. They remain same as in FY 2015-16
Thus the the basic exemption slabs/limits for FY 2016-17 AY 2017-18 are as under:
 (a)For Individuals (both male or female) HUF, AoP or BoI:
Income Slabs
Rates
Up to Rs. 250000/-
Nil
From 250001 to Rs. 500000
10%
From 500001 to Rs. 1000000
20%
Above Rs. 1000000
30%

(b)   Senior Citizens (60 years or more but less than 80 years)
Income Slabs
Rates
Up to Rs. 300000/-
Nil
From 300001 to Rs. 500000
10%
From 500001 to Rs. 1000000
20%
Above Rs. 1000000
30%

(c)Super Senior Citizens (80 Years or more)
Income Slabs
Rates
Up to Rs. 500000/-
Nil
From 500001 to Rs. 1000000
20%
Above Rs. 100000
30%
Notes:

Rebate section 87A for FY 2016-17 AY 2017-18 is over and above the above mentioned Slabs    Read more>>  
Surcharge – has been increased from 12% to 15& if the 
  total income   exceeds Rs. 1 crores
Education Cess on income-tax- 2%
Secondary and Higher Education Cess- 1%
- See more at: http://abcaus.in/incometax/incometax-basic-exemption-slab-limits-fy2016-17-ay2017-18-individual-huf.html#sthash.IAy5ajZJ.dpuf

There are no changes proposed in the income tax basic esmetion limits/slabs for individuals/HUF etc. They remain same as in FY 2015-16
Thus the the basic exemption slabs/limits for FY 2016-17 AY 2017-18 are as under:
 (a)For Individuals (both male or female) HUF, AoP or BoI:
Income Slabs
Rates
Up to Rs. 250000/-
Nil
From 250001 to Rs. 500000
10%
From 500001 to Rs. 1000000
20%
Above Rs. 1000000
30%

(b)   Senior Citizens (60 years or more but less than 80 years)
Income Slabs
Rates
Up to Rs. 300000/-
Nil
From 300001 to Rs. 500000
10%
From 500001 to Rs. 1000000
20%
Above Rs. 1000000
30%

(c)Super Senior Citizens (80 Years or more)
Income Slabs
Rates
Up to Rs. 500000/-
Nil
From 500001 to Rs. 1000000
20%
Above Rs. 100000
30%
Notes:

Rebate section 87A for FY 2016-17 AY 2017-18 is over and above the above mentioned Slabs    Read more>>  
Surcharge – has been increased from 12% to 15& if the 
  total income   exceeds Rs. 1 crores
Education Cess on income-tax- 2%
Secondary and Higher Education Cess- 1%
- See more at: http://abcaus.in/incometax/incometax-basic-exemption-slab-limits-fy2016-17-ay2017-18-individual-huf.html#sthash.IAy5ajZJ.dpuf
There are no changes proposed in the income tax basic esmetion limits/slabs for individuals/HUF etc. They remain same as in FY 2015-16
Thus the the basic exemption slabs/limits for FY 2016-17 AY 2017-18 are as under:
 (a)For Individuals (both male or female) HUF, AoP or BoI:
Income Slabs
Rates
Up to Rs. 250000/-
Nil
From 250001 to Rs. 500000
10%
From 500001 to Rs. 1000000
20%
Above Rs. 1000000
30%

(b)   Senior Citizens (60 years or more but less than 80 years)
Income Slabs
Rates
Up to Rs. 300000/-
Nil
From 300001 to Rs. 500000
10%
From 500001 to Rs. 1000000
20%
Above Rs. 1000000
30%

(c)Super Senior Citizens (80 Years or more)
Income Slabs
Rates
Up to Rs. 500000/-
Nil
From 500001 to Rs. 1000000
20%
Above Rs. 100000
30%
Notes:

Rebate section 87A for FY 2016-17 AY 2017-18 is over and above the above mentioned Slabs    Read more>>  
Surcharge – has been increased from 12% to 15& if the 
  total income   exceeds Rs. 1 crores
Education Cess on income-tax- 2%
Secondary and Higher Education Cess- 1%
- See more at: http://abcaus.in/incometax/incometax-basic-exemption-slab-limits-fy2016-17-ay2017-18-individual-huf.html#sthash.IAy5ajZJ.dpuf

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