The correct answer is option 1. Explanation & Key Takeaways: Direct Tax Code (DTC): Highlights of Direct Tax Code Removal of most of the tax saving schemes: • DTC removes most of the categories of exempted income. Unit Linked Insurance Plans (ULIPs), • Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Long term infrastructures bonds, house loan principal repayment, stamp duty, and registration fees on the purchase of house property will lose tax benefits. All these schemes earlier came under savings u/s 80c exemption. New tax saving schemes: • Tax saving-based investment limit remains 100,000/- but another 50,000/- has been added just for pure life insurance (Sum insured is at least 20 times the premium paid), health insurance, media claims policies, and tuition fees up to two children. • But the one lakh investment u/s 80c can now only be done in a provident fund, superannuation fund, gratuity fund, and new pension scheme (NPS). Home loan interest: • The exemption will remain the same as 1.5 lakhs per year for interest on housing loans for self-occupied properties. Short-term gains: : • Only half of the Short-term capital gains will be taxed. e.g. if you gain 50,000, add 25,000 to your taxable income. Long-term gains: • Long-term capital gains (From equities and equity mutual funds, on which STT has been paid) are still exempted from income tax. EEE and EET: • As per changes on 15th June 2010, Tax exemption at all three stages (EEE) —savings, accretions, and withdrawals—to be allowed for provident funds (GPF, EPF, and PPF), NPS (new pension scheme administered by PFRDA), Retirement benefits (gratuity, leave encashment, etc), pure life • insurance products & annuity schemes. Earlier DTC wanted to tax withdrawals. Education Cess: • Surcharge and education cess is abolished. Hence c is not correct. Income arising from House Property: • Deductions for Rent and Maintenance would be reduced from 30% to 20% of the Gross Rent. • Also, all interest paid on a house loan for a rented house is deductible from rent. LTA (Leave travel allowance): • Tax exemption on LTA is abolished. Hence b is not correct. Education loan: • Tax exemption on Education loans to continue.Hence a is correct.