Income Tax Slabs and Rates for FY 2015-16 and AY 2016-17
(Also given for the previous FY i.e. FY 2014-15 )
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The following INCOME TAX RATES ARE applicable for the
Financial Year ending March 31, 2016
(i.e. Financial Year 2015-16) - Assessment Year 2016-17)
Every year the income tax rates are changed and it is important to get the latest income tax rates. We give below the
Income Tax Rates and Slabs
applicable for the FY 2015-16 or AY 2016-17. [As
there was no change in Income Tax slabs for FY 2015-16
(i.e. AY 2016-17), the following rates were also applicable for FY 2014-15 (AY
2015-16)
(This category is abolished from this year and is thus is same as that of
General Category
Senior Citizens (Men and Women above 60 years of age), but below 80 years
Very Senior Citizens (Men and Women above 80 years of age)
Upto Rs. 2,50,000
Nil
Nil
Nil
Nil
Rs. 2,50,001 to Rs. 3,00,000
10% *
10% *
Nil
Nil
Rs. 3,00,001 to Rs. 5,00,000
10% *
10% *
10% *
Nil
Rs. 5,00,001 to Rs. 10,00,000
20%
20%
20%
20%
Above Rs. 10,00,000
30% **
30% **
30% **
30%**
Thus, we can say :-
The basic exemption limit for individuals (i.e. below 60 years of
age) is Rs 2.50 lakhs
The basic exemption limit for Senior citizens (60 years to below 80
years) is : Rs 3.00 lakhs
The basic exemption limit for Very Senior Citizens(80 years and
above) is Rs3.50 lakhs
* A tax rebate of Rs 2,000 from tax calculated will be available for people
having an annual income upto Rs 5 lakh. However, this benefit of
Rs2,000 tax credit will not be available if you cross the income range of Rs 5
lakh. Thus we can say that tax payable in 10% slab will be maximum
Rs23,000 (taking into account Rs 2000 tax credit), but for people who fall in
income range of Rs5 lakh and above, the tax will be Rs25,000 + 20% tax on income
above Rs 5 lakh;
The education cess to continue at 3 percent.
**
The Surcharge @ 12%
for the FY 2015-16 or AS 2016-17 will be payable if the income is above Rs 1
crores).
For the FY 2014-15 it was 10% .
Surchargeon
taxable income exceeding Rs. 1 Crore for Individuals, Senior Citizens,
Very Senior Citizens, HUFs, AOPs, BOIs, artificial juridical persons,
firms, cooperative societies and local authorities
10% of Income Tax
12% of Income Tax
Comparison of Benefits under
various IT Sections
Exempted amount of transport allowance
Rs. 800/- per month
Rs. 1,600/- per month
Section 80D-
Deduction for Health Insurance premium
Rs. 15,000/-
Rs. 25,000/-
Section 80D-
Deduction for Health Insurance premium for Senior Citizens
Rs. 20,000/-
Rs. 30,000/-
Investment in Sukanya Samriddhi Scheme
-
Eligible for deduction u/s 80C and any payment from the scheme shall not
be liable to tax.
Section 80DDB-
Deduction in case of very senior citizens on expenditure on account of
specified diseases
Rs. 60,000/-
Rs. 80,000/-
Section 80DD-
Maintenance, including medical treatment of a dependent who is a person
with disability
Rs. 50,000/-
Rs. 75,000/-
Section 80DD-
Maintenance, including medical treatment of a dependent who is a person
withseveredisability
Rs. 1,00,000/-
Rs. 1,25,000/-
Section 80U-
Person with disability
Rs. 50,000/-
Rs. 75,000/-
Section 80U-
Person withseveredisability
Rs. 1,00,000/-
Rs. 1,25,000/-
Section 80CCC-
Contribution to provident fund of LIC or IRDA approved insurer
Rs. 1,00,000/-
Rs. 1,50,000/-
Section 80CCD-
Contribution by the employee to National Pension Scheme (NPS)
Rs. 1,00,000/-
Rs. 1,50,000/-
Now under Section 80CCD, a deduction of upto Rs. 50,000 is allowed over
and above the limit of Rs. 1.50 lakh under Section 80C in respect of contributions made to
NPS is also allowed. Thus, now the total deduction that can
be claimed under Section 80C+Section 80CCD = Rs 2 lakh.
In case
any employer contributes to the NPS scheme on behalf of the employee and
the benefit of the same would be availed by the employee, the employee
would also be allowed a deduction under Section 80CCD(2) for the amount
of contribution made by the employer.
Wealth Tax Has been Abolished in the Budget for
2015-16
Changes
that were effected from earlier year ie
the FY 2014-15 (AY 2015-16)
Investment limit under section 80C of the Income-Tax Act raised from Rs.1
lakh to Rs. 1.5 lakh.
·
Deduction limit on account of interest on loan in respect of self
occupied house property raised from Rs.1.5 lakh to Rs. 2 lakh.
PPersonal Income-tax exemption limit raised by
Rs 50,000/- that is, from Rs. 2 lakh to Rs. 2.5 lakh in the case of individual taxpayers, below
the age of 60 years.
1. Filing of income tax is compulsory for all individuals whose
gross annual income exceeds the maximum amount which is not charageble to income
tax (e.g. Rs.3,00,000 for Senior citizens, Rs.2,50,000/- for resident individuals
2. The last date for filing of income tax return is usually July
31 for individuals (sometimes the same is extended).
However, for the
FY 2014-15 i.e. Assessment Year 2015-16, the last date has been extended upto
31st August 2015.
3. The penalty for non filing of income tax return is Rs.5,000/-
(1) Deductions from Taxable
Income (Section 80C) :-
VARIOUS INVESTMENTS OPTIONS
AVAILABLE TO INDIVIDUALS AND TAX BENEFITS AVAILABLE UNDER EACH OF THEM -
Financial Year 2015-16
A new section 80C was introduced (replacing section 88) from the financial year
2005-06. Under this Section, a deduction of upto Rs.1,50,000/- (wef FY
2014-15) is allowed
from Taxable Income in respect of the investments made in some specified
schemes. The schemes are similar as were available in Section
88 earlier. Now there are no sectoral caps and individuals can save in any
of the schemes upto Rs.1,50,000/- (now even in PPF it is allowed upto Rs. 150 lac
as against only Rs.1 lakh upto March 2014).. The tax payers can plan their investments / savings so
as to achieve their financial goals. The details of such schemes alongwith some major features of
each of these are given below : -
(last reviewed in
April, 2016)
Saving Scheme
Sec. under which Tax Benefit available
Return till March 31,2016
Return from April 1, 2016
Tax benefits for earnings (i.e. interest received / dividend received)
Lock in Period
and other Remarks
National Saving Certificates - ( NSC scheme )
Section 80C
8.50% for VIII Series 5 Year NSCs; and 8.80% for 10 year NSCs for FY 2015-16
8.10% for VIII Series 5 Year NSCs; and 10 year NSCs have been discontinued from April 2016
Taxable
5 years (reduced wef Dec 2011 from 6
years to 5 years for new investments). The yield on these NSCs will
now be revised every year and will be 25 bps above the 5 year government bond yields
Equity Linked Savings Schemes (ELSS)
Section 80C
Varies from year to year (Market
linked)
Varies from year to year (Market
linked)
Dividend is tax free
3 years
Life Insurance Policies
Section 80C
Varies from year to year
Varies from year to year
Varies from scheme to scheme
Varies from scheme to scheme
Unit Linked Insurance Plan (ULIP)
Section 80C
Varies from year to year
Varies from year to year
Varies from scheme to scheme
Varies from scheme to scheme
(15 to 20 years)
Infrastructure Bonds (NO
LONGER AVAILABLE FOR FRESH INVESTMENT)
Section 80C
Varies from issue to issue.
These were around 8%+ in Dec 2011. These have lost their charm
as Additional Tax rebate of Rs 20,000 is NOT given now from FY 2012-13
onwards.
--Same--
Taxable
3 to 5 years
Contribution to EPF / GPF /
Voluntary PF
Section 80C
8.75% on EPF for 2013-14
(announced in August 2013)
8.8% on EPF for 2016-17
(announced in April 2016)
Interest earned is tax free
Till retirement (loans are
permitted only after 5 years)
Insurance Policies
Section 80C
6 to 7% only
6 to 7% only
Earnings are tax free in most
of the cases
Locked till maturity
ULIPS
Section 80C
Market linked
Market linked
Earnings are tax free
Partial withdrawal allowed
Public Provident Fund (PPF)
Section 80C
8.70% for FY
2015-16
8.10% for FY
2016-17
Interest
earned is tax free
15 years and extendable.
Withdrawals allowed after 7 years. Yield on PPF will vary and will be
fixed at 25 basis point above the 10 year government bonds.
NPS
Section 80C
Market Linked
Market Linked
Interest earned is tax free
Withdrawal not permitted
before maturity
Tuition Fees including
admission fees or college fees paid for full time education of any two
children of the assessee.
Section 80C
Not applicable
Not applicable
Not applicable
Not applicable
Repayment of Housing Loan
(Principal)
Section 80C
Not applicable
Not applicable
Not applicable
Not applicable
Bank Tax Saving Fixed Deposits
Schemes - 5 Years
Section 80C
Varies from bank to bank (around
7.50%
- 8.75%)
Varies from bank to bank (around
7.00%
- 8.00%)
Taxable
5 Years
Senior Citizens Savings Scheme 2004 (from financial year 2007-08)
Section 80C
9.30% for FY 2015-16
8.60% for FY 2016-17
Taxable
As per the guidelines issued
in December 2011, there will be spread of 100 basis points above the 5 year
bonds yields for this scheme.
Post Office Time Deposit Account (from financial 2007-08)
Section 80C
8.50% for five year Time
Deposit
7.90% for five year Time
Deposit
Taxable
PS Note : Now some of the above
investments (like PPF and 5 Year Senior Citizens Saving Schemes etc.)
are linked to the benchmark of 10 year / 5 Year government bond yields, and
thus the return on these investments will vary as and when the yield
on government bonds changes. Therefore, now remember
that you will not have fixed rate of return on these investments.
On the other hand, for other Small Saving schemes GoI will advise before 1st
April every year, the rates applicable for those schemes for the next FY.
Such instruments will continue to have same return for the whole tenure of the
investment. [For clarification see below the notification which is self
explanatory]
Deductions Allowed
In Sections Beyond 80 C :
(1) Deductions Under Section 80CCC(1) :
Under this section, the contributions by individuals towards "Pension" schemes
of LIC or any other Insurance company, is allowed as deduction of Rs.10,000/-.
However, as provided under section 80CCE, the aggregate deduction u/s 80C, and
u/s 80CCC and 80CCD can not exceed Rs.1,50,000/-.
Thus effectively, now
these are covered under the maximum limit of Rs.1,50,000/- under section
80C.
(2) Deductions Under Section 80 D :
Basic Deduction under Section 80D,
Mediclaim premium paid
for Self, Spouse or dependant children has now been raised to Rs 25,000 wef
FY 2015-16.
The deduction for
senior citizens is raised from Rs
20,000 to Rs 30,000.
For uninsured super senior citizens (more than
80 years old) medical expenditure incurred up to
Rs 30,000 shall be allowed as a deduction under
section 80D. However, total deduction for
health insurance premium and medical expenses
for parents shall be limited to Rs 30,000.
However, there are a few conditions:
You
can not claim tax benefit on health insurance premium paid for
your in-laws;
Proof of payment of premium has to be furnished, in order to
avail the tax benefit
The
health insurance premium must be paid from taxable income of
that year only if you want to claim a deduction.
Thus, if one has paid the premium from ones savings or from
gifts of money received, then one is not eligible for tax
benefits under this section.
However, you have to remember that the
premium paid by any mode of other than cash is eligible. Note prior to 1st
April 2009, premium payment was required to be paid only by cheque. However,
now even the payments through Credit card or other on line mechanism are
allowed. Thus, now all payment modes except cash payment are accepted
(3) Deductions Under Section 80 E :
Under this section, deduction is available for payment of interest on a loan
taken for higher education from any financial institution or an approved
charitable institution. The loan should be taken for either pursuing a full-time
graduate or post-graduate course in engineering, medicine or management, or a
post-graduate course in applied science or pure science.
Loan should have been taken for the purpose of pursuing higher
studies of Individual , Spouse, Children of Individual or of the student of whom
individual is legal Guardian. Education loan taken for siblings (brother /
sister) or other relatives (in-laws, nephew, niece, etc.) would not qualify for
section 80E benefit.
The
amount of interest paid is eligible for deduction and moreover
there is no cap on the amount to
be deducted. You can deduct the entire interest amount from your taxable income.
However there is no benefit available on
the repayment of principal amount of the loan. Deduction shall be
allowed in computing the total income in respect of the initial assessment year*
and seven assessment years immediately succeeding the initial assessment year or
until the interest is paid by the assessee in full, whichever is earlier. The
tax benefits on education loan are only valid once you start the repayment and
moreover they are only available up to eight years. For instance if your loan
tenure exceeds eight years, you cannot claim for deductions beyond eight years.
(4) Deductions Under Section 24(b) :
Under this section, interest on borrowed capital for the purpose of house
purchase or construction is deductible from taxable income upto Rs.2,00,000/- is
deductible from income. (certain conditions are to be fulfilled)
We have seen that the principal amount in the repayment of
a home loan can be added to the 80C limit of Rs1.5 lakh for tax savings.
However, the
interest component of home loans is allowed as deduction under Section 24 B for
up to Rs2 lakh in case of a self-occupied house. In case the house
is in the joint name of your spouse and you (joint loan), each one can avail of
Rs2 lakh interest component deduction. This limit is only for
self-occupied house. If you have property which is rented out, you can deduct
the full interest paid on the home loan. The rent on the property does become
part of your income. If the rent is lesser than the loan interest, it will lower
your overall tax liability.
Section 80CCF allowed you to invest an
additional Rs. 20,000 in infrastructure
bonds, and such an investment was
reduced from your taxable income in addition
to the Rs.100,000 deduction you get from the
other instruments listed above.
You were to get the
tax benefit only in
the year in which
you have invested in
these instruments.
NOW THIS IS NOT ALLOWED
TAX FREE INCOMES :
Some of the incomes are completely exempted from income tax and that too
without any upper limit. The following incomes which are tax free :-
(a) Interest on EPF / GPF / PPF
(b) Interest on GOI Tax Free Bonds / Tax Free Bonds issued with specific
stipulation to this effect
(c) Dividends on Shares and Mutual Funds. Dividend income from
companies / Equity Oriented Mutual funds is completely exempt in the hands of
investors. Dividend is also tax free in the hands of investors in case of
debt-oriented Mutual Fund schemes. (However, the Asset Management Company
is liable to deduct 22.44% distribution tax in case of non individuals / non HUF
investors and 14.025% in case of individuals or HUF investors.)
(d) Capital receipts from Life Insurance policies i.e. sums received either
on death of the insured or on maturity of Life insurance plans. However,
in case of life insurance policies issued after March 31, 2004, exemption on
maturity payment u/s 10(10D) is available only if premium paid in any year does
not exceed 20% of the sum asssured;
e) Interest on Saving Bank accounts in banks upto Rs10,000/- per year (from
FY 2012-13 onwards)
(f) Long term capial gains on sale of shares and equity mutual funds after
01/10/2004, if security transaction is paid / imposed on such transactions.
GIFT TAX :
Gift tax was abolished with effect from October 1, 1998. The gifts are
no longer taxable in the hands of donor or donee. However, w.e.f.
September 1, 2004, any gift received by an individual or HUF will be included in
taxable income, if the amount of tax exceeds Rs.25,000/-. However,
gifts received from any of the following will continue to remain tax free :-
(i) Spouse;
(ii) Brother or sister;
(iii) Brother or sister of the spouse;
(iv) Brother or sister of either of the parents of the individual;
(v) Any lineal ascendant or descendant of the individual
(vi) Any lineal ascendant or descendant of the spouse of the individual
(vii) spouse of the person referred to in (2) or (6) or received on the
occasion of marriage or under a will by way of inheritance
Capital Gains :
Capital gains arise when an individual sells at a profit
certain assets like property or shares or mutual funds or bonds etc
The treatment of such income is not the same as income from other
sources. There are two types of capital gains, viz
Short Term Capital Gains or Long Term Capital Gains.
(a) Short Term Capital Gains :
Capital gain is considered as Short Term Capital Gain, if immovable
property is sold / transferred within three years of acquiring the same.
Similarly, if shares or other financial securities such as mutual funds
are sold within one year of purchase, the profit earned is treated as
Short Term Capital Gain.
Short term capital gain is included in the gross taxable income and
normal tax rates are applicable. However, w.e.f. 1st October,
2004, the short term capital gains from sale of equity shares or units
of equity oriented mutual fund schemes are taxed only at a flat rate of
10%, irrespective of the tax slab on other sources of income, provided
securities transaction tax is paid on such sale.
(b) Long Term Capital Gains : Capital
gain is considered as the Long Term, if the immovable property is sold
after three years from purchse, or financial securties such as shares,
deep discount bonds, units of open ended or close ended schemes of
mutaula funds are disposed (i.e. sold / redeemed / transferred) after
holding the same for more than twelve months, then the gain is
considered to be long term capital gain.
Long term capital gains on transfer of listed shares / units of
equity oriented mutual funds schemes has been exempted from tax w.e.f.
1st October, 2004, provided securities transaction tax has been paid on
such sale. For assets other than the listed shares / units of
mutual funds schemes, tax is payable in respect of long term capital
gains at a flat rate of 20% and the amount of gain has to be adjusted
for inflation through indexation benefit.
Long term capital gains tax in respect of bonds and debt securities
or debt oriented mutual fund schemes listed on stock exchanges is
payable at a flat rate of 10% of the capital gains amount. In case an
individual wishes to avail the benefits of indexation, then tax has to
be paid at normal long term capital gains tax rate of 20%.
Section 54EC of the I-T Act, 1961 : Relief
from Capital Gains Tax
You can make good use of this Section to save Taxes
specially when you sell some property. The Income Tax laws
provides for taxes on long-term capital gains at 20 per cent for individuals
and foreign firms and 30 per cent for domestic companies. However, Section
54EC of the I-T Act, 1961, provides relief from capital gains tax.
Under this Section, gains on transfer of a long-term capital asset can be
exempted from tax if the money is invested in bonds of specified
institutions such as NABARD, the Rural Electrification Corporation (REC),
SIDBI or the National Highway Authority of India. Such bonds are
redeemable after three years. However, to save tax, you have
to invest in these bonds within six months from the date of transfer of the
original asset. Thus investing in these bonds will effectively mean
that your money is locked in for three years. If you want to buy a new
property one or two years after transferring the original asset, you will
have to either wait or look for alternative funds. After the
lock-in period or on the maturity of the bonds, the investor is free to put
in his money in any kind of asset. However, the interest on the
bond is taxable.
On the other hand, State Bank of India, offers SBI
Capgains Plus Scheme where lock-in period is absent, a slightly higher
interest rate compared to the capital gain tax saving bonds is offered.
The proceeds of the sale of the capital asset can be parked in the fixed
deposit scheme under the Capgains Plus plan at an interest rate marginally
higher than what bonds under Section 54 EC would fetch. The interest earned
will be taxed at prevailing rates. However, unlike the bonds under 54
EC, the depositor cannot put the money in a different kind of asset. The
plan stipulates that re-investment should be made on the specified asset
only. Therefore, this scheme is a boon for people who have sold
their property but haven't been able to purchase the property within the
stipulated period. Once a final decision is taken on
the property you want to reinvest in, you can opt for an exit from SBI Plan,
but you will need to get a certificate of consent from the assessment
officer.
Revision of interest rates for Small Savings Schemes
Please refer to our circular
RBI/2011-12/359 dated January 20, 2012 regarding
interest rates on small savings schemes, wherein it was indicated that as
per Government’s decision on revision of interest on small savings schemes,
the interest rates on various small savings schemes for every financial year
will be notified by the Government before April 01st of that year.
2. The Government of India have vide their Office
Memorandum (OM) No.6/01/2011-NS.II dated March 31, 2015,
advised the rate of interest on various small savings schemes for the
financial year 2015-16. Accordingly, the rates of interest on PPF 1968, SCSS
2004, Kisan Vikas Patra & Sukanya Samriddhi Account Scheme for the financial
year 2015-16, effective from April 01, 2015, on the basis of the interest
compounding/payment built-in in the schemes, will be as under:
Scheme
Rate of Interest w.e.f. 01.04.2014 (Old rates)
Rate of Interest w.e.f. 01.04.2015
Rate of Interest w.e.f. 01.04.2016
5 year SCSS, 2004
9.20% p.a
9.30% p.a
8.60% p.a
PPF, 1968
8.70% p.a
8.70% p.a
8.10% p.a
Kisan Vikas Patra
8.70% p.a
8.70% p.a
7.80% p.a
Sukanya Samriddhi Account Scheme
9.10% p.a
9.20% p.a
8.60% p.a
3. The contents of this circular may be brought to the notice of the
branches of your bank operating the PPF 1968, SCSS 2004, Kisan Vikas Patra &
Sukanya Samriddhi Account Schemes. These should also be displayed on the
notice boards of your branches for information of the subscribers to these
Schemes.
Yours faithfully
(Shrikant Hamine)
Manager
Revision of Interest Rates for Small Savings Schemes for the Financial Year
2015-16 Announced
Various decisions taken by the Government of India on the
recommendations of the Shyamala Gopinath Committee for Comprehensive Review
of National Small Savings Fund (NSSF), were communicated to all concerned by
the Government through its Office Memorandum dated 11thNovember,
2011.
One of the decisions of the Government based on the
recommendations of the Committee relates to revision of interest rates every
financial year, to be notified before 1stApril
of that year. Accordingly with the approval of the Finance Minister, the
rates of interest on various small savings schemes for the Financial Year
2014-15 effective from 01.04.2014, on the basis of the interest
compounding/payment built-in in the schemes, shall be as under :
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