The tax system in India is progressive, meaning that as taxpayers' income increases, they end up paying higher taxes. Whereas, the taxpayers who fall into the low to medium tax brackets can save a significant amount of money.

Tax slabs help determine the total taxable income during a fiscal year. However, before you start calculating your taxes, you need to know the income on which tax will be calculated. This is because earned income is not the same as taxable income.

Suggested Read: Steps to Calculate Your Taxable Income and Tax Liability

Chapter VI A has various sub sections that you can use to claim deductions so as to reduce your taxable income.

What is Chapter VIA of Income Tax Act?

As per Chapter VIA of the Income Tax Act, a taxpayer can claim deductions from income on the basis of various tax-saving investments, permitted expenditures, donations, etc. The deductions under Chapter VIA are designed to benefit the taxpayer so that the tax burden is reduced.

For instance, deductions can be claimed under Sections 80C , 80CCC, 80CCD, 80CCE, 80D to 80U of the Income Tax Act.

Under deductions from Chapter VIA, you can not only save and invest money - but also save on taxes.

Below you will find all the information you need to know about Chapter VIA.

Conditions for Availing Deductions under Chapter VIA

The following conditions must be met to qualify for deductions under Chapter VIA:

• Under Chapter VIA, a taxpayer's deductions cannot exceed their gross total income. For example, the taxpayer earns Rs. 3, 00,000 in Gross Total Income. The total deductions under Chapter VIA amount to Rs. 3, 50,000. Due to this, the amount of deductions allowed to the taxpayer will now be Rs. 3, 00,000 because the deductions (Rs. 3, 50,000) cannot exceed the Gross Total Income (Rs. 3,00,000).
• Under section 111A and section 112 deductions under Chapter VIA will not be allowed for long-term capital gains and short-term capital gains .

Deductions underChapter VIA

The Sections which gives benefit of lowering the taxes to Individual and HUF taxpayers are listed below:

Deduction under Section 80C

Deduction under Section 80CCC

Deduction under Section 80CCD

The government of India has notified deductions for contributions to pension schemes. The deductions fall into three categories:

Deduction under Section 80CCE

There can be a maximum deduction of Rs. 1, 50,000 under section 80C, 80CCC , and 80CCD(1). The breakdown is as follows:

The following table lists the ceiling limits under other sections, which do not exceed the limit of Rs. 1,50,000 specified under section 80CCE:

Deduction under Section 80D

Suggested Read: Section 80D Deduction - Eligibility, Deduction & Calculation

Deduction under Section 80DD

Deduction under Section 80DDB

Deduction under Section 80E

Deduction under Section 80EE

Suggested Read: Section 80EE: Income Tax Deduction for Interest on Home Loan .

Deduction under Section 80EEA

• 80EEA deduction is in addition to the deduction available under section 24 while computing ‘income from house property

Interest paid on the Housing Loan is up to Rs.1,50,000

Deduction under Section 80EEB

Suggested Read: Section 80EEB Deduction: Tax Benefit of Buying an Electric Vehicle

Deduction under Section 80G

List of Donee (recipients) in Category 1:

1. The National Defence Fund set up by the Central Government
2. Prime Minister’s Relief Fund
3. Prime Minister’s Armenia Relief Fund
4. The Africa (Public Contributions - India) Fund
5. The National Children’s Fund
6. The National Foundation for Communal Harmony
7. Approved University or educational institution of national eminence
8. Maharashtra Chief Minister’s Earthquake Relief Fund
9. Any Fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the Gujarat Earthquake
10. Any Zila Saksharta Samiti for primary education in villages and towns and for literacy and post-literacy activities
11. National Blood Transfusion Council or any State Blood Transfusion Council whose sole objective is the control, supervision, regulation or encouragement of operation and requirements of blood banks
12. Any State Government Fund set up to provide medical relief to the poor.
13. The Army Central Welfare Fund or Indian Naval Benevolent Fund or Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of past and present members of such forces or their dependants.
14. The Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
15. The National Illness Assistance Fund
16. The Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund
17. The National Sports Fund set up by the Central Government
18. The National Cultural Fund set up by the Central Government
19. The Fund for Technology Development and Application set up by the Central Government
20. National Trust for welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
21. The Swachh Bharat Kosh, set up by the Central Government
22. The Clean Ganga Fund, set up by the Central Government (only Residents are eligible for deduction)
23. The National Fund for Control of Drug Abuse

Suggested Read: Section 80G Deduction: Tax Benefits on Donation Made to NGO

Deduction under Section 80GG

Deduction under Section 80GGB

Deduction under Section 80GGC

Suggested Read: Donation to Political Party - Sections 80GGC and 80GGB Tax Deductions

Deduction under Section 80TTA

Suggested Read: Section 80TTA: Claim Tax Deduction on Savings Account Interest Income

Deduction under Section 80TTB

Deduction under Section 80U

The deductions under Chapter VIA are beneficial and efficient. Because a majority of these investments not only help you save money but also grow it. In the end, you would want to expand your corpus and protect it. Chapter VIA deductions can help you do both.

The best time to start investing in various Chapter VIA instruments and make the most of your money is now if you haven't already done so. Connect with our trusted financial experts today!