Beat the taxman

BoyLazy Income-Tax-Deductions-FY17-header

Just a month for financial year 2016-17 to end. We hope all your tax saving investments are in order by now – if not, no worries, we’ve got you covered. Here’s a quick guide to tax saving avenues you can look at.

BoyLazy Income-Tax-Deductions-FY17
BoyLazy Income-Tax-Deductions-FY17

Salary based reimbursements / exemptions


Conveyance / Transport Allowance

– component of salary when employer does not provide transport to/from office
– upto Rs. 1,600 per month (Rs. 19,200) is exempt from tax


House Rent Allowance (HRA)

Percentage of Basic salary. If you are living on rent and getting HRA, tax exemption is the minimum of
– HRA received
– 50% of Basic salary in metro cities (40% of Basic salary for non-metros)
– Actual rent paid


Medical Allowance

– Bills for medicines and treatment for self and dependents
– Upto Rs. 1,250 per month (Rs. 15,000 per year) can be claimed as reimbursement
– Bills have to be submitted in original


Children’s Education Allowance

– Tuition fees up to Rs. 100 per month per child up to a maximum of 2 children
– Can be to a school, college, university, educational institution within India
– Includes payments towards play school and nursery


Leave Travel Allowance (LTA)

– Can be availed of twice in a block of four calendar years
– Current block is from 2014 – 2017
– To claim, you have to officially be on leave, only domestic travel is allowed, and you have to be among the travellers
– Only travel cost is exempt, not entire holiday expense on food, accommodation etc


Profession Tax

– State government tax payable @ Rs. 200 per month (Rs. 300 in February) ie. Rs. 2,500 per year
– Reduces your taxable income


Deductions allowed under Section 80C


Public Provident Fund (PPF)

– Upto Rs. 1.5 lakhs deduction allowed
– Lock-in period of 15 years
– Interest is tax free (regulated by Govt)
– Proceeds on maturity are tax free


Employee Provident Fund (EPF)

– 12% of Basic salary deducted per month
– Matching contribution from employer
– Only employee contribution eligible for tax deduction


Life Insurance Premium, ULIP

– Premium for self, spouse, children
– If purchased after 01-Apr-12, deduction allowed if premium < 10% of sum assured


Equity Linked Savings Schemes (ELSS)

– Upto Rs 1.5 lakhs deduction allowed
– Lock-in period of 3 years for each investment
– Proceeds on maturity (and dividends if any) are tax-free


Tax Saving Deposit Scheme in Post Office / Bank

– Lock-in period of 5 years
– Interest is taxable


National Pension System (NPS)

– Upto Rs 1.5 lakhs deduction allowed
– From FY16, additional deduction of Rs 50,000 allowed u/s 80CCD(1B)
– Contribution and accrual is exempt, proceeds on maturity are taxable


Sukanya Samriddhi Yojana (SSY)

– account can be opened for a girl child (birth till 10 years of age)
– upto Rs 1.5 lakhs deduction allowed
– Interest rate currently 8.5% (regulated by Govt)
– Deposit, interest, withdrawal all tax-free


Deductions available under some other sections 

Section 80D 

– Upto Rs 25,000 towards premium for health insurance of self, spouse, dependent children
– Upto Rs 30,000 towards premium for health insurance of self (senior citizens)
– Upto Rs 30,000 towards premium for health insurance and medical expenses for parents


Section 80E

– Deduction for interest on education loan
– No limit on amount of interest that can be claimed as deduction
– Deduction available for 8 years (max) or till interest is paid
– Interest should be paid from income that is chargeable to tax


Section 80GG

If self employed professional, or salaried but do not receive HRA, exemption is least of
– rent paid minus 10% of total income
– Rs. 5000/- per month
– 25% of total income


These are some of the more common deductions available – the complete list is on the Income Tax Department’s website.

Hope you found these useful – now go and beat the taxman!  ?


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