Chapter VI-A Deductions are the investments or some specific expenditure that is allowed in the income tax act as a deduction from the Gross Total Income so that the tax liability of an individual can be reduced. The most popular Deduction which almost every individual takes is under section 80C. Chapter VI-A provides deductions for Interest Earnings, LIC premium expenses, Medical Expenses, House Rent Expenses, House Loan Principal Expenses, etc. So let’s discuss some Chapter VI-A Deductions which are most useful for Individuals to bring their income down for tax purposes:
- Section 80C Deduction: This Section helps in bring the income down by 150,000 in a financial year, if the expenses are incurred up to this limit or the investments are made or done both. This Deduction can be taken if the Amount is spent or invested in Payment towards life Insurance Premium, Provident Fund, Housing loan repayment (Only Principal Payment- Interest payment deduction can be taken under 80EEA or section 24), National Saving certificates, ULIP, Amount invested in buying shares/Debentures of companies approved by CBDT, Tuition Fees for Self Spouse and Children, Amount spend in buying Mutual Fund or ELSS approved by CBDT.
- Section 80D Deduction: Amount spends for Medical Insurance Premium. The deduction will be available if the amount spends for buying medical insurance premium for self, spouse, and children up to Rs.25,000/- and Additional Rs. 25,000 for Amount spent on Parents (Amount will be Rs. 50,000 if age if parents are more than 60 years).
- Section 80DDB Deduction: Amount spent on medical treatment will be allowed as deduction under this section. Where the assessee is less than 60 years of age Rs. 40,000 will be available as a deduction or the actual expenses whichever is less. In the case of Senior citizens, the amount allowed as deduction under this section will be a maximum of Rs. 1,00,000
- Section 80E: Amount spent for interest on loan taken for higher education will be allowed as deduction. The maximum number of years for which deduction can be claimed is 8 years. No Ceiling limit for the actual expenditure of interest.
- Section 80GG: Amount spent towards rent payment for accommodation will be allowed as a deduction under this section of the income tax act. The deduction is restricted to a maximum amount of Rs. 60,000. However, this deduction cannot be claimed if the assessee is claiming the deduction under House Rent Allowance i.e. Simultaneous deduction for the same amount cannot be claimed. Either Benefit of Rent paid can be claimed under this section or HRA.
- 80TTA: Amount Received as interest income from saving bank account will be allowed as deduction. However, a maximum of 10,000 can be claimed as a deduction under this section, i.e. if interest income from saving bank accounts is less than Rs. 10,000 then the entire amount of interest will be tax-free however is interest income is more than Rs. 10,000, then the amount exceeding Rs. 10,000 will be taxable at the normal rates.
The income tax department does not ask for any proof while taking the benefit of these sections in the income tax return, however, documents as proof have to be produced before the income department whenever any query arises in respect of this for any individual. So it is advisable not to take any deduction of the expenditure which is not legitimate and for which the assessee does not have any proof, as this may entail in issuing notices and heavy penalty and late fees can be charged from the wrongdoers.
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