Table of Contents
Introduction
Chapter VI-A deductions of the Income Tax Act plays a major role in reducing the tax burden of the assessees in a legal manner. This chapter offers a wide array of tax deductions that allow taxpayers to reduce from their gross total income thereby reducing the tax liability of the taxpayers. This chapter allows assessees to claim deductions based on their income, investment and much more. It is important to know the sections correctly to claim deductions under this chapter to reduce your tax liability and to help you make smarter financial decisions.
Chapter VI-A contains various sections under which deductions can be claimed. In this blog post we will divide the sections based on the nature of the expenditure or investment. We shall divide the sections into the following categories
- Investment-Based Deductions
- Health & Medical Deductions
- Loan-Based Deductions
1. Investment Based Deductions
Section 80C – Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.
While computing the total income, Individual and HUF are allowed to claim deduction under this section for the payments made to the below mentioned investments and expenditures.
The maximum limit for claiming deduction is ₹ 1,50,000/-.
Under this section payments made to following investments and expenditures can be claimed on actual payment basis:
| Eligible Investment/Payment | Description |
|---|---|
| Life Insurance Premium | In case of Individual – Premium paid for self, spouse and children. In case of HUF – Any member of the HUF. |
| Public Provident Fund (PPF) | Contributions made to PPF of either self or minor child |
| Employee Provident Fund (EPF) | Available to salaried employees on their contribution |
| 5-Year Fixed Deposit | Fixed Deposits opened with scheduled banks with a lock-in period of five years. |
| Equity Linked Saving Scheme (ELSS) | Investment made in tax-saving mutual funds with a three year lock-in period. |
| National Savings Certificate (NSC) | Investment made in NSC are eligible for deduction in the year of investment and the interest earned on such investment is also eligible on accrual basis. |
| Principal Repayment on Home Loan | Principal amount paid on Housing loan taken from : (i) the Central Government or any State Government, or (ii) any bank, including a co-operative bank, or (iii) the Life Insurance Corporation, or the National Housing Bank, or (iv) any public company which is carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes or (v) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or (vi) the assessee’s employer. |
| Tuition Fees | For full time education eligible for two children. Note : Only Tuition fees can be claimed as deduction. |
| Sukanya Samriddhi Yojana (SSY) | SSY account opened in a bank in the name of the girl child |
| Senior Citizens Savings Scheme (SCSS) | Deposit made in SCSS by a senior citizen aged 60 years and above. |
| Unit Linked Insurance Plans (ULIPs) | Premium paid for ULIPs offered by insurers. |
Section 80CCC – Deduction in respect of contribution to certain pension funds
This section is applicable to Individuals for contributions made towards pension fund of LIC or any other insurer for receiving pension.
The amount of deduction shall be the whole amount paid or deposited (excluding interest or bonus accrued or credited to the assessee’s account, if any). The maximum limit for claiming deduction is ₹ 1,50,000/-.
Where any amount is received by the assessee or his/her nominee together with the interest or bonus accrued on account of surrender of the annuity plan or as pension received from the annuity plan, the whole of the amount received shall be deemed to be the income of the assessee or his nominee, as the case may be, in that previous year in which such withdrawal is made or, as the case may be, pension is received, and shall accordingly be chargeable to tax as income of that previous year.
Section 80CCD – Deduction in respect of contribution to pension scheme of Central Government.
This section provides deductions for contributions made to pension schemes.
This section has been further divided into three sub-sections namely:
- 80CCD(1) – Employee’s or individual’s contribution
- 80CCD(1B) – Additional deduction for self-contribution
- 80CCD(2) – Employer’s contribution
80CCD(1) – Employee’s or individual’s contribution
This section is applicable to Individuals who have been employed by the Central Government or has deposited any amount in the pension scheme notified by the Central Government, a deduction will be allowed in the computation of total income.
The applicable limit for claiming deduction is the whole amount deposited but does not exceed:
- in the case of an employee, ten per cent (10%) of his salary in the previous year; and
- in any other case, twenty per cent (20%) of his gross total income in the previous year.
The maximum limit for claiming deduction is ₹ 1,50,000/-. This limit is inclusive of Section 80C and 80CCC.
80CCD(1B) – Additional deduction for NPS
This section is applicable to Individuals who have paid or deposited the amount in the previous year in his account under a pension scheme notified or as may be notified by the Central Government.
Deduction under this section can be claimed if no deduction is allowed under sub-section(1) as stated above. The maximum limit for claiming deduction is ₹ 50,000/-.
Note: No deduction can be claimed under sub-section (1B) if deduction has already been claimed under sub-section (1).
Amendments to 2025 Budget w.e.f 01-04-2026 : If any amount is paid or deposited in the name of the minor child under the pension as notified by the Central Government by the parent or the guardian of the minor, deduction can be claimed under this sub-section by the parent or the guardian of the minor within the limit of ₹ 50,000/-.
Section 80CCD(2) – Employer’s Contribution to NPS
This section is applicable when any amount amount has been contributed by the employer being the Central Government or the State Government or any other has contributed to the National Pension Scheme, the individual shall be allowed deduction while computing his total income.
The eligible amount of deduction : the whole of the amount contributed by the Central Government or the State Government or any other employer as does not exceed
(a) fourteen per cent, where such contribution is made by the Central Government or the State Government;
(b) ten per cent, where such contribution is made by any other employer,
of his salary in the previous year
Amendment w.e.f 01-04-2025 : in clause (b) instead of 10% deduction at the rate of 14% will be allowed.
Section 80CCE – Limit on deductions under sections 80C, 80CCC and 80CCD.
The maximum limit under section 80C, 80CCC and sub-section (1) of 80CCD should not exceed ₹ 1,50,000/-.
2. Health & Medical Deductions
Section 80D – Deduction in respect of health insurance premia.
This section allows deductions for payments made towards medical insurance or contributions made to Central Government Health Scheme or such other scheme as may be notified by the Central Government or any payment made for preventive health check-ups.
This section is applicable to Resident and Non-Resident Individuals. The section also prescribes separate limits for Individuals and Senior Citizens.
Eligible amount of deduction is as under:
| Persons Covered | Eligible Amount |
|---|---|
| Health Insurance Premiums for Self Spouse & Dependent Children below the age of 60 years | ₹ 25,000 |
| Health Insurance Premiums for Self Spouse & Dependent Children above the age of 60 years | ₹ 50,000 |
| Health Insurance Premiums for parents who are below the age of 60 years | ₹ 25,000 |
| Health Insurance Premiums for parents who are above the age of 60 years | ₹ 50,000 |
| Preventive Health Check-Up | ₹ 5,000 |
Conditions for claiming deduction:
- Health Insurance should be paid in any mode other than cash.
- Preventive Health Check-Up can be paid through cash or any other mode.
If a senior citizen does not have any medical insurance or health insurance, he/she can claim the medical expenditure spent by him/her. Provided such expenditure should have been made through any mode other than cash.
This section is applicable to HUF also for the payments made on behalf of the member of the HUF.
Section 80DD – Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability.
Deduction under this section can be claimed by Individuals and HUF, who are resident in India who has:
- incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or
- paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company.
Note : This section is applicable to persons who are dependant and with disability
Eligible amount of deduction (these limits are fixed)
| Nature of Disability | Deduction Amount |
|---|---|
| Person with disability (i.e ≥ 40% but < 80%) | ₹75,000 |
| Person with severe disability (i.e > 80%) | ₹1,25,000 |
Conditions to claim deduction:
- Should furnish a copy of the certificate issued by the medical authority.
- For insurance-based claims, the policy must:
(a) Policy should be in the name of the disabled dependant;
(b) Provide for annuity/lump sum in the event of taxpayer’s death
Dependant means:
In the case of Individual – Spouse, children, parents, brothers and sisters of the individual or any of them.
In the case of HUF – a member of the HUF.
Note : If the disabled dependent predeceases the taxpayer and a lump sum or annuity is received, the amount is taxable in the hands of the taxpayer.
Section 80DDB – Deduction in respect of medical treatment, etc
Deduction under this section is available to assessee who is resident in India and has incurred medical treatment for specified diseases or ailments.
Eligible assessees are:
- Self or dependant, in case the assessee is an individual; or
- Member of a Hindu undivided family, in case the assessee is a Hindu undivided family.
Allowable amount of deduction:
| Category of Patient | Maximum Deduction Allowed |
|---|---|
| Individual / HUF (patient < 60 years) | ₹40,000 |
| Senior Citizen (≥ 60 years) | ₹1,00,000 |
Specified Diseases Covered Under Section 80DDB:
- Neurological Diseases where the disability level has been certified to be of 40% and above
- Malignant Cancers
- Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)
- Chronic Renal failure;
- Hematological disorders:
(i)Hemophilia;
(ii)Thalassaemia.
Prescription or certificate for such medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist to be obtained to avail deduction.
If any amount has been reimbursed by way or any insurance or from the employer for the medical treatment, such amount shall be reduced from the expenditure incurred.
3.Loan-Based Deductions
Section 80E – Deduction in respect of interest on loan taken for higher education.
Deduction under this section is available to Individuals who have taken loan for pursuing higher education from a financial institution or an approved charitable institution either for self or for his relative
Eligible amount : Interest on loan paid can be claimed as deduction.
Duration of deduction :
- Available for maximum 8 consecutive years
- Starts from the year in which interest payment begins.
- Ends earlier of
(a) 8 years; or
(b) year of repayment of the interest amount.
Section 80EE – Deduction in respect of interest on loan taken for residential house property
Deduction under this section can be claimed by an Individual who pays interest on loan taken from any financial institution for the purpose of acquisition of a residential property. This deduction is above the limit under Section 24(b) (₹2,00,000 limit for home loan interest). This section is applicable to Individuals buying their first residential property.
Conditions to be fulfilled:
| Criteria | Requirement |
|---|---|
| Loan Sanctioned Date | Between 01 April 2016 and 31 March 2017 |
| Loan Amount | Should not exceed ₹35 lakhs |
| Property Value | Should not exceed ₹50 lakhs |
| Ownership | Taxpayer must not own any other house on the loan sanction date |
Eligible amount : Up to ₹50,000 per financial year.
Note : Deduction under this section cannot be claimed together with Section 80EEA for the same loan.
Section 80EEA – Deduction in respect of interest on loan taken for certain house property.
Deduction under this section can be claimed by Individuals who pays interest on loan taken from any financial institution for purchase of a residential house property . The loan must be taken from This deduction is over and above the deduction under Section 24(b) for interest on housing loans.
Note : Deduction under this section cannot be claimed if deduction under section 80EE has already been claimed.
Conditions to be fulfilled:
| Criteria | Requirement |
|---|---|
| Loan Sanctioned Date | Between 01 April 2019 and 31 March 2022 |
| Stamp Duty Value of House | Up to ₹45 lakhs |
| Loan Source | Must be from a financial institution or housing finance company |
| Other Property | Must not own any residential property on the date of loan sanction |
Eligible amount : Up to ₹1,50,000 per financial year.
Section 80EEB – Deduction in respect of purchase of electric vehicle.
Deduction under this section can be claimed by Individuals who pays interest on loan taken from any financial institution for purchase of an electric vehicle.
Conditions to be fulfilled:
| Criteria | Requirement |
|---|---|
| Loan Sanction Date | Between 01 April 2019 and 31 March 2023 |
| Purpose | Purchase of electric vehicle (EV) – two-wheeler or four-wheeler |
| Loan Source | Financial institution or NBFC |
| First-Time Deduction | Assessee must not have claimed this under any other section |
Eligible amount : Up to ₹1,50,000 per financial year.
