What is Chapter VI-A?
Chapter VI-A is a part of the Income Tax Act, 1961 in India that allows taxpayers to claim deductions from their gross total income on certain investments, expenses, and contributions made during the financial year. The deductions under Chapter VI-A are a significant tax-saving opportunity for taxpayers as they reduce the amount of tax liability.
Sections and Deductions
Section 80C: Deduction for investments in specified schemes such as life insurance, provident fund, public provident fund, national savings certificate, etc. The maximum deduction allowed under this section is ₹1.5 lakh.
Section 80D: Deduction for health insurance premium paid for self, spouse, dependent children, and parents. The maximum deduction allowed under this section is ₹25,000 for individuals below 60 years of age and ₹50,000 for senior citizens.
Section 80CCD: Deduction for contribution to the National Pension System (NPS) by the employee or the employer. The maximum deduction allowed under this section is 10% of salary or 20% of gross total income, whichever is lower, for the employee and 10% of salary for the employer.
Section 80G: Deduction for donations made to certain funds and charitable institutions. The deduction allowed under this section varies from 50% to 100% of the donation amount, subject to certain limits and conditions.
Section 80TTA: Deduction for interest income from a savings bank account. The maximum deduction allowed under this section is ₹10,000.
Read More Income Tax Deduction Guide.
Tax Benefits of Chapter VI-A
Chapter VI-A of the Income Tax Act offers a wide range of tax benefits to individuals and businesses. By investing in specific financial instruments, making certain expenditures, or contributing to charitable causes, taxpayers can significantly reduce their tax liability.
Some of the key deductions available under Chapter VI-A include:
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Section 80C: This section allows for a deduction of up to Rs. 1.5 lakh for investments in life insurance premiums, provident funds, national savings certificates, tuition fees, and other eligible instruments.
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Section 80D: This section provides a deduction for health insurance premiums for self, spouse, dependent children, and parents. The limit varies based on the age of the taxpayer.
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Section 80E: Interest on education loans taken for higher education is deductible under this section.
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Sections 80EE and 80EEA: These sections offer deductions for interest on home loans, with specific limits and eligibility criteria.
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Section 80G: Donations to registered charitable organizations can be deducted under this section.
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Sections 80TTA and 80TTB: These sections provide deductions for interest earned on savings bank accounts and fixed deposits, respectively.