Chapter VI-A deductions under the Income tax Act
Deductions under Chapter VI A of Income Tax Act
Chapter VI A deduction - Introduction
India has a progressive tax system, which means when taxpayers’ income rises, they must pay more taxes. I.e. More the income, More the tax. But it also provides a few methods to save an amount of tax via investment. The taxpayers in the higher bracket may not see the benefit of such savings, but the taxpayers who falls into the low to medium tax categories, however, can save a large amount of money.
In the Income Tax Act, a provision is made through Chapter VIA to help the taxpayer to save a certain amount of tax and also have a saving created for their future. These savings are mainly under Section 80 which provides a number of subsections permitting an assessee to invest in certain tax-saving investments, permissible expenses, charitable contributions, etc. and get the benefit of reduced tax on their gross total income.
List of Deductions of Chapter VI A (table) [deduction, nature of deduction and who can claim]
The sections that benefit individual and HUF taxpayers to reduce their taxes are described below:
Deduction under Section 80C
Who is qualified | HUF and an Individual |
Conditions and Investments | In order to benefit from Section 80C, the taxpayer must make the following investments and payments: 1, Premium for life insurance 2, Public Provident Fund contribution (PPF) 3, Recognized Employee Provident Fund Contribution (EPF) 4, Contributions to the National Pension System (NPS) 5, Investment in National Savings Certificate (NSC) 6, Investment in a plan for equity-linked savings (ELSS) 7, Five-year Term deposit (TD) in a scheduled bank or post office 8, Principal on Housing Loan Repaid 9, Tuition fees for a maximum of two children attending a full-time Indian college, school, university, or other educational institution 10, Investment in Mutual Funds 11, Sukanya Samriddhi Scheme contribution (SSS) 12, Few more In order to be eligible for a deduction under Section 80C, each of the above mentioned investments and payments must meet specific standards, including lock-in periods, interest rates, and other factors. |
Deduction Amount | The maximum deduction allowed by Section 80C is Rs. 1,50,000, , subject to Section 80CCE. |
Deduction under Section 80CCC
Taxpayer who is qualified | Individuals who have invested any money in a specific pension fund supplied by a life insurance company. HUF (Hindu Undivided Family) is not eligible for the deduction under this section. |
Condition | If a deduction is requested under this section, no deductions may be requested under Section 80C. |
Amount of Deduction | A deduction of Rs. 1,50,000 is permitted under Section 80CCC, subject to Section 80CCE. |
Other Points | The following amounts will be taxable during the year they are received:
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Deduction under Section 80CCD
| 80CCD (1) Deduction for NPS | Contribution made by the employee to the National Pension Scheme under section 80CCD (1). The following are the maximum deduction permitted:
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| 80CCD (1B) Deduction for NPS | The amount deposited into the NPS account is subject to an additional deduction of Rs 50,000.
Deductions are also available on contributions made to the Atal Pension Yojana. |
| 80CCD (2) Deduction for NPS | Under this clause, deduction can be claimed in the employer’s contributions up to 10% of the basic pay plus the allowance. Only salaried people and not self-employed people are eligible for the benefits in this area. |
Other Deductions under Chapter VI A
80D | Deduction on premium paid to Health Insurance. Here, the taxpayer can take the insurance for him/herself and the dependent family which will include their parents. The deduction available is Rs 25000 for both self as well as parents. If in case, parents are senior citizens, the deduction increases to Rs 50000 and in a very rare case of self-being senior citizen the same applies |
80DD | Deduction on medical care expenses of a dependent who is disabled or payment to a designated programme for the differently disabled dependent’s maintenance. The maximum deduction allowed under this section is Rs 75,000 in general and Rs 125000 in severe conditions |
80DDB | Deduction of Rs. 40,000 or the actual amount spent, whichever is smaller, on medical expenses for specific disease or sickness |
80E | Deduction on interest paid towards student education loan taken out to pursue higher education. The deduction is allowed for self, children and dependent siblings higher education only. |
80G | Deduction on contributions made to specific charities, funds, etc. The various donations listed in Section 80G are allowed for deductions up to 100% or 50%, with or without restrictions, as stated in Section 80G. |
80GG | Rent payments made by non-salaried people who do not receive HRA benefits are deducted. The maximum deduction is Rs 5,000 per month or 25% of your annual income, whichever is smaller. |
80GGA | Deduction for certain donations made to support Scientific Research and Rural Development |
80GGC | Deduction on contributions made to political parties by the taxpayer |
80RRB | Deduction in relation to royalties on patents. (Maximum Deduction of Rs. 3,00,000/- or actual payment, whichever is less) |
80QQB | Tax deduction for royalties on book publication. The maximum deduction is Rs. 3,00,000 or actual payment, whichever is less. |
80TTA | Deduction on Interest of savings accounts. Maximum Deduction: 10,000 rupees |
80TTB | Deduction on Interest of savings accounts for Senior Citizens. Maximum Deduction: 50,000 rupees |
80U | Flat Deduction given to an disabled individual with at least 40% disability.. (Maximum Deduction: Rs. 75,000 for general disability; Rs. 1,25,000 for severe disability.) |
Conditions for Availing Deductions under Chapter VIA
To be eligible for Chapter VIA deductions, the following requirements must be met:
- Within Chapter VIA, Deductions made by a taxpayer cannot exceed their total gross income. For example, the taxpayer’s gross total income is Rs. 3, 00,000. The total deductions under Chapter VIA come to Rs. 3, 50,000. As a result, the taxpayer will now be permitted to deduct Rs. 3, 00,000, as the deductions (Rs. 3, 50,000) cannot exceed the Gross Total Income (Rs. 3,00,000).
- Long-term capital gains and short-term capital gains are not eligible for Chapter VIA deductions under sections 111A and 112, respectively.
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