Tax Benefits Provided in Finance Act 2015

Particulars of Tax Benefits

Exiting Provision

Deduction / Benefit allowed

Effective Date of Amendment

Tax benefits under section 80C for the girl child under the Sukanya Samriddhi Account Scheme

No such concept

Exemption given under EEE model: (i) The investments made in the Scheme will be eligible for deduction under section 80C of the Act.(ii) The interest accruing on deposits in such account will be exempt from income tax.

(iii) The withdrawal from the said scheme in accordance with the rules of the said scheme will be exempt from tax.

1st April, 2015, i.e., AY 2015-16 and subsequent assessment years.

Amendment in section 80D relating to deduction in respect of health insurance premia

Maximum deduction allowed under this section can be summarized as under:

Maximum deduction allowed under this section can be summarized as under:

1st April, 2016, i.e., AY 2016-17 and subsequent assessment years.

Raising the limit of deduction under section 80DDB

For treatment of special deceases deduction upto Rs 40,000/- is allowed and in respect to senior citizen Rs 60,000/-.Conditions:1. Certificate from specialist doctor working under government hospital.

For treatment of special deceases deduction upto Rs 40,000/- is allowed. For senior citizen assessee deduction upto Rs 60,000/- is allowed.For vary senior citizen assessee deduction upto Rs. 80,000/- is allowed.

Conditions:

1. Assessee will be required to obtaina prescription from a specialist doctor.

1st April, 2016, i.e., AY 2016-17 and subsequent assessment years.

Raising the limit of deduction under section 80DD and 80U for persons with disability and severe disability

Condition:

1. Person shall be certified by the medical authority to be a person with disability.

1st April, 2016, i.e., AY 2016-17 and subsequent assessment years.

Raising the limit of deduction under 80CCC

Under the existing provisions contained in sub-section (1) of the section 80CCC, an assessee, being an individual is allowed a deduction upto one lakh rupees in the computation of his total income, of an amount paid or deposited by him to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from a fund set up under a pension scheme.

In order to promote social security, it is proposed to amend sub-section (1) of the said section so as to raise the limit of deduction under section 80CCC from one lakh rupees to one hundred and fifty thousand rupees, within the overall limit provided in section 80CCE.

1st April, 2016, i.e., AY 2016-17 and subsequent assessment years.

Additional deduction under 80CCD

Under the existing provisions contained in sub-section (1) of section 80CCD of the Income-tax Act, 1961 if an individual, employed by the Central Government on or after 1st January, 2004, or being an individual employed by any other employer, or any other assessee being an individual has paid or deposited any amount in a previous year in his account under a notified pension scheme, a deduction of such amount not exceeding ten per cent of his salary in the case of an employee and ten per cent of the gross total income in case of any other individual is allowed. Similarly, the contribution made by the Central Government or any other employer to the said account of the individual under the pension scheme is also allowed as deduction under sub-section (2) of section 80CCD, to the extent it does not exceed ten per cent. of the salary of the individual in the previous year.Sub-section (1A) of section 80CCD provides that the amount of deduction under sub-section (1) shall not exceed one hundred thousand rupees. Till date, under section 80CCD, only the National Pension System (NPS) has been notified by the Ministry of Finance.

With a view to encourage people to contribute towards NPS, it is proposed to omit sub-section (1A). In addition to the enhancement of the limit under section 80CCD(1), it is further proposed to insert a new sub-section (1B) so as to provide for an additional deduction in respect of any amount paid, of upto fifty thousand rupees for contributions made by any individual assessees under the NPS.Consequential amendments are also proposed in sub-section (3) and sub-section (4) of section 80CCD.

1st April, 2016, i.e., AY 2016-17 and subsequent assessment years.

Enabling of filing of Form 15G/15H for payment made under life insurance policy

No such provision

The Finance (No.2) Act, 2014, inserted section 194DA in the Act with effect from 1.10.2014 to provide for deduction of tax at source at the rate of 2% from payments made under life insurance policy, which are chargeable to tax. It has been further provided that no deduction shall be made if the aggregate amount of payment during a financial year is less than Rs. 1,00,000. In spite of providing high threshold for deduction of tax under this section, there may be cases where the tax payable on recipient’s total income, including the payment made under life insurance, will be nil. The existing provisions of section 197A of the Act inter alia provide that tax shall not be deducted, if the recipient of the certain payment on which tax is deductible furnishes to the payer a self-declaration in prescribed Form No.15G/15H declaring that the tax on his estimated total income of the relevant previous year would be nil. It is, therefore, proposed to amend the provisions of section 197A for making the recipients of payments referred to in section 194DA also eligible for filing self-declaration in Form No.15G/15H for non-deduction of tax at source in accordance with the provisions of section 197A.

This amendment will take effect from 1st June, 2015.

Relaxing the requirement of obtaining TAN for certain deductors

Under the provisions of section 203A of the Act, every person deducting tax (deductor) or collecting tax (collector) is required to obtain Tax Deduction and Collection Account Number (TAN) and quote the same for reporting of tax deduction/collection to the Income-tax Department.

To reduce the compliance burden of these types of deductors, it is proposed to amend the provisions of section 203A of the Act so as to provide that the requirement of obtaining and quoting of TAN under section 203A of the Act shall not apply to the notified deductors or collectors.

This amendment will take effect from 1st June, 2015.