
Chapter VIA of the Income Tax Act provides a host of deductions that can significantly reduce your taxable income. These deductions are aimed at encouraging savings, investment, and expenditure in areas beneficial to the individual as well as society. Understanding these provisions can help you optimize your tax planning effectively.
What is Chapter VIA?
Chapter VIA encompasses Sections 80C to 80U of the Income Tax Act, 1961. Each section specifies a particular type of deduction, with conditions and limits that taxpayers must adhere to. These deductions are available to individuals and, in some cases, Hindu Undivided Families (HUFs).
Key Deductions Under Chapter VIA
1. Section 80C – Investments and Expenses
Maximum Limit: Rs. 1.5 lakh per financial year
This is the most commonly used section for tax-saving purposes. Eligible investments and expenditures in 80C include:
Life Insurance Premiums
Employee Provident Fund (EPF)
National Savings Certificate (NSC)
Tax-saving Fixed Deposits (5-year tenure)
Principal repayment of home loan
Tuition fees for children (up to 2 children)
2. Section 80CCC – Pension Funds
Maximum Limit: Included in the overall limit of Rs. 1.5 lakh under Section 80C
Deduction for contributions made to annuity plans of insurance companies to receive a pension. Read more
3. Section 80CCD – National Pension System (NPS)
80CCD Sub-sections:
80CCD(1): Employee or self-employed contribution (limit is 10% of salary or gross total income).
80CCD(1B): Additional deduction up to Rs. 50,000 for NPS contributions.
80CCD(2): Employer’s contribution (limit is 10% of salary; not included in Rs. 1.5 lakh cap).
4. Section 80D – Health Insurance Premiums
Maximum Limit:
Rs. 25,000 for individuals below 60 years
Rs. 50,000 for senior citizens
Additional Rs. 50,000 for policies covering parents (senior citizens)
Covers premiums paid for health insurance policies and preventive health check-ups. Read more
5. Section 80DD – Maintenance of Disabled Dependents
Maximum Limit:
Rs. 75,000 for dependents with 40%-80% disability
Rs. 1,25,000 for dependents with severe disability (80% or more)
Covers expenditure incurred for medical treatment and maintenance of disabled dependents. Read more
6. Section 80DDB – Medical Treatment of Specified Diseases
Maximum Limit:
Rs. 40,000 for individuals below 60 years
Rs. 1,00,000 for senior citizens
Expenses for treatment of specified diseases such as cancer, chronic renal failure, etc., qualify under this section. Read more
7. Section 80E – Education Loan Interest
Maximum Limit: No upper limit
Interest paid on loans taken for higher education for self, spouse, children, or a student for whom the taxpayer is a legal guardian. Read more
8. Section 80G – Donations to Charitable Institutions
Maximum Limit: Varies (50% or 100% of the amount donated; some with and some without limits)
Donations to approved funds and organizations, such as the PM CARES Fund, qualify for this deduction. Read more
9. Section 80GG – Rent Paid
Maximum Limit: Rs. 5,000 per month or 25% of total income (whichever is lower)
Applicable for taxpayers who do not receive HRA as part of their salary. Read more
10. Section 80GGC – Donations to Political Parties
Maximum Limit: No upper limit (must not be in cash)
Covers donations to political parties or electoral trusts.
11. Section 80TTA and 80TTB – Interest Income
80TTA: Deduction up to Rs. 10,000 on interest from savings accounts (for individuals below 60 years).
80TTB: Deduction up to Rs. 50,000 on interest from deposits (for senior citizens).
12. Section 80U – Disability of the Taxpayer
Maximum Limit:
Rs. 75,000 for disability between 40%-80%
Rs. 1,25,000 for severe disability (80% or more)
Available to individuals with certified disabilities. Read more
Chapter VI-A Income Tax Deductions: A Comprehensive Table
Below is a detailed table of deductions under Chapter VI-A, including the relevant section, deduction limits, and key details:
Section | Nature of Deduction | Maximum Limit | Key Details |
---|---|---|---|
80C | Investments and payments | ₹1,50,000 | Includes EPF, PPF, NSC, ELSS, LIC premiums, principal on home loans, tuition fees, etc. |
80CCC | Pension Funds | ₹1,50,000 (combined) | Premium paid for annuity plans of insurance companies. |
80CCD(1) | Contributions to NPS and APY | ₹1,50,000 (combined) | Employee or individual contributions (subject to 10% of salary or 20% of gross income). |
80CCD(1B) | Additional NPS Contributions | ₹50,000 | Available for additional voluntary contributions to NPS. |
80D | Health Insurance Premium | ₹25,000 / ₹50,000 | ₹25,000 for self and family; ₹50,000 for senior citizens (including parents). |
80DD | Maintenance for Disabled Dependents | ₹75,000 / ₹1,25,000 | ₹75,000 for 40%-80% disability; ₹1,25,000 for severe disability (>80%). |
80DDB | Medical Treatment for Specified Diseases | ₹40,000 / ₹1,00,000 | ₹40,000 for individuals; ₹1,00,000 for senior citizens. |
80E | Education Loan Interest | No Limit | Interest on loans taken for higher education for self, spouse, or children. |
80EE | Interest on Home Loan (First-Time Buyers) | ₹50,000 | For loans sanctioned between April 1, 2016, and March 31, 2017, on loans up to ₹35 lakh. |
80EEA | Interest on Home Loan (Affordable Housing) | ₹1,50,000 | For loans sanctioned between April 1, 2019, and March 31, 2022. |
80EEB | Interest on Electric Vehicle Loan | ₹1,50,000 | Loan taken for purchasing electric vehicles. |
80G | Donations to Specified Funds/Charities | 50%-100% of Amount | Depending on the organization and donation type. |
80GG | Rent Paid (No HRA Received) | ₹5,000/month or 25% of total income | For individuals not receiving HRA. |
80GGA | Donations for Scientific Research | 100% of Amount | For donations made to approved scientific research institutions. |
80GGB | Donations to Political Parties | 100% of Amount | For companies contributing to political parties. |
80GGC | Donations to Political Parties (Individuals) | 100% of Amount | For individuals contributing to political parties. |
80JJAA | Employment Generation for New Workers | 30% of Additional Employee Cost | For businesses hiring new employees. |
80RRB | Royalty Income from Patents | ₹3,00,000 | For individuals earning royalty from patents. |
80TTA | Savings Account Interest | ₹10,000 | Available to individuals and HUFs on savings account interest. |
80TTB | Interest Income for Senior Citizens | ₹50,000 | Applicable to senior citizens on bank deposits. |
80U | Disability of the Individual | ₹75,000 / ₹1,25,000 | ₹75,000 for 40%-80% disability; ₹1,25,000 for severe disability (>80%). |
Conclusion
Chapter VIA offers multiple avenues to reduce your tax liability while promoting investments, savings, and contributions to societal welfare. To maximize these deductions, ensure timely investments and maintain proper documentation. Consulting a CA like us can help you make the most of these provisions and achieve optimal tax planning.
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