How an individual taxpayer can claim tax benefits upto Rs 4.44 Lakhs from FY2015-16

Income tax benefits Rs 4.44 LakhsHow an individual taxpayer can claim tax benefits upto Rs 4.44 Lakhs from FY2015-16


In recent budget speech, Finance Minister indicated that an individual taxpayer can claim tax benefits of Rs 4.44 Lakhs from Financial year 2015-16 beyond the income tax exemption limit. This includes all tax saving options like PPF, Housing loan interest, health insurance premium, life insurance premium etc., What are these tax benefits which are available for individuals. In this article I would provide more details about these Rs 4.44 Lakhs tax exemptions that are announced in recent budget and are applicable from financial year 2015-16 onwards.

How an individual taxpayer can claim tax benefits upto Rs 4.44 Lakhs from FY2015-16


This amount of Rs 4.44 Lakhs tax benefits is beyond the income tax exemption limit available for individuals.

Also Read: Top and Best ELSS Tax Saving Mutual funds to invest in 2015

1) Deductions u/s 80C – Rs 150,000


Following are the eligible deductions u/s 80C.

  • Children tuition fees is allowed as deduction. No transport allowance / term fees is allowed as deduction.
  • Amount deposited in Public Provident Fund. You can open PPF account with any post office / SBI / ICICI Bank etc.,
  • Amount contributed towards the Employees Provident Fund (EPF)
  • Post office term deposit for 5 years / 5 Year Tax Saving Bank FD Scheme
  • National Saving Certifications (NSC) – 5 years and 10 years
  • ELSS tax saving Mutual Funds.
  • Senior Citizen Savings Scheme from post office / bank
  • Principal repayment of Home Loan amount
  • National Pension System / New Pension Scheme (NPS)
  • Life Insurance Premium

2) Deductions under 80CCD for contribution to NPS Rs 50,000


Employees can contribute to New Pension Scheme / National Pension Scheme (NPS) up to 10% of their salary. In such case, an employee is eligible to claim additional Rs 50,000 tax benefits over and above 80C. Hence max limit 80C + 80CCD would be Rs 2 Lakhs.

3) Interest on house property loan Rs 200,000


If you have taken home loan, you are eligible to claim interest on home loan (which is termed as loss from house property in your tax computations) to the tune of Rs 2 Lakhs. This amount is only interest and any principal repayment would go in 80C only. You should note that this interest is only for first home loan. If you have taken second home loan, you can claim unlimited interest exemption as it would treated as let-out and you would show income from such rental property too. 

4) Exemption of new transportation allowance being revised to Rs 19,200 per annum


Earlier, the exemption for transport allowance was Rs 800 per month / Rs 9,600 per month. Now from financial year 2015-16, it has been increased to Rs 1,600 per month / Rs 19,200 per annum. This is a straight deduction and no specific proofs required.

5) Exemption of allowable deduction for Health insurance premium – Rs 25,000


Health insurance is becoming a basic need now as we do not know when a medical emergency would come. Exemption limit has been increased from next financial year to Rs 25,000 per annum. Consider taking best health insurance plan and claim this amount as an exemption.

Also Read: What are the various ways where working couples can save income tax in India?

Rs 4.44 Lakhs tax exemptions explained with an example


Mr.Akhil Kumar, age 35, is working in an MNC company and gross income is Rs 7 Lakhs. Assuming that he is not claiming any HRA etc., the following would be deductions

a) Total Income – Rs 7 Lakhs

  • Less: Amount deposited in PPF (80C) – Rs 1.5 Lakhs
  • Less: Deductions under 80CCD for contribution to NPS Rs 50,000
  • Less: Interest on house property loan Rs 200,000
  • Less: Exemption of transportation allowance of Rs 19,200 per annum
  • Less: Health insurance premium – Rs 25,000

b) Total deductions – Rs 4.44 Lakhs

c) Taxable income = Rs 2.56 Lakhs (Rs 7 Lakhs minus Rs 4.44 Lakhs)

  • Tax upto Rs 2.5 Lakhs nil
  • Tax from Rs 2.5 Lakhs to Rs 2.56 Lakhs – 10% (excl surcharge if any) i.e. Rs 6,000 x 10% = Rs 600.

d) Hence total tax applicable is Rs 600 per year.

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Suresh
How an individual taxpayer can claim tax benefits upto Rs 4.44 Lakhs from FY2015-16

39 comments

  • VINOD KUMAR SINHA

    First time I have seen such a nicely elaboration on tax rebate, I just want to have a clarity that I am regular employee of Private Power Company and I superannuated from PSU, then how should I get 80CCD benefit.

  • priya

    Sir,
    If my CPS amount is Rs 75000per year can I claim this u/s 80CCD Rs50000 and u/s 80C Rs25000?
    Thanks for your valuable information.

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