All about Deductions (Income Tax Act, 1961)

Tax deductions under Chapter VI-A of the Income-tax Act, 1961 allow eligible taxpayers to reduce their Gross Total Income before arriving at taxable Total Income.

These deductions cover eligible investments, insurance premiums, pension contributions, medical expenditure, education-loan interest, donations, rent, disability-related expenditure and certain other payments.

However, an important distinction must be made between the old tax regime and the new tax regime. Most commonly used Chapter VI-A deductions are available only under the old tax regime.

Chapter VI-A deductions: Old Tax Regime vs New Tax Regime

For AY 2026-27, the new tax regime under Section 115BAC is the default regime for eligible individuals. Taxpayers may opt for the old tax regime subject to the applicable conditions.

Under the new tax regime, most deductions such as Sections 80C, 80D, 80E, 80G, 80GG, 80TTA and 80U cannot generally be claimed.

The principal Chapter VI-A deductions available under the new tax regime include:

• Section 80CCD(2) – Employer's contribution to the notified pension/NPS scheme
• Section 80CCH – Eligible contributions to the Agniveer Corpus Fund

Section 80C – Investments and eligible payments

Section 80C is one of the most commonly claimed deductions under the old tax regime.

Eligible investments and payments may include:

• Life insurance premium
• Employees' Provident Fund (EPF)
• Public Provident Fund (PPF)
• National Savings Certificate (NSC)
• Equity Linked Savings Scheme (ELSS)
• Eligible Unit Linked Insurance Plans (ULIPs)
• 5-year tax-saving bank fixed deposits
• Eligible tuition fees for children
• Principal repayment of qualifying housing loans
• Stamp duty and registration charges for eligible residential property
• Sukanya Samriddhi Account contributions
• Other specified eligible investments and payments

Not every mutual fund, fixed deposit or insurance policy automatically qualifies under Section 80C. The relevant statutory conditions must be satisfied.

Maximum deduction under Sections 80C, 80CCC and 80CCD(1)

The combined deduction available under Sections 80C, 80CCC and 80CCD(1) is restricted to ₹1,50,000 under Section 80CCE.

Section 80CCC – Contribution to eligible pension or annuity plans

Section 80CCC covers eligible contributions made by an individual to specified pension or annuity plans of LIC or other approved insurers.

The deduction forms part of the overall ₹1,50,000 combined limit applicable to Sections 80C, 80CCC and 80CCD(1).

Section 80CCD(1) – Individual contribution to NPS

Section 80CCD(1) provides a deduction for an individual's own contribution to the notified pension scheme, including the National Pension System.

The deduction is broadly restricted to:

• Employees: up to 10% of salary
• Other individuals: up to 20% of Gross Total Income

The deduction remains subject to the overall ₹1,50,000 ceiling under Section 80CCE.

Section 80CCD(1B) – Additional deduction for NPS contribution

An additional deduction of up to ₹50,000 is available for eligible contributions to the notified pension scheme.

This deduction is over and above the ₹1,50,000 combined limit applicable to Sections 80C, 80CCC and 80CCD(1).

NPS contribution for a minor – applicable from AY 2026-27

From AY 2026-27, Section 80CCD(1B) can also apply where a parent or guardian makes an eligible contribution to the pension-scheme account of a minor, subject to the prescribed conditions.

The aggregate deduction under Section 80CCD(1B) continues to be restricted to ₹50,000.

Section 80CCD(2) – Employer's contribution to NPS

Section 80CCD(2) provides a separate deduction for eligible contributions made by an employer to an employee's notified pension or NPS account.

This deduction is separate from the ₹1.5 lakh limit under Section 80CCE.

Under the old tax regime

• Central Government or State Government employer: up to 14% of salary
• Other eligible employers: up to 10% of salary

Under the new tax regime

For AY 2026-27, the deduction may extend up to 14% of salary for eligible employer contributions, subject to the applicable provisions.

Section 80D – Health insurance and medical expenditure

Section 80D provides deductions for qualifying health-insurance premiums, preventive health check-ups and specified medical expenditure.

Self, spouse and dependent children

• ₹25,000 ordinarily
• ₹50,000 where the applicable insured person is a senior citizen

Parents

An additional deduction may be available for parents:

• ₹25,000 ordinarily
• ₹50,000 where the applicable parent is a senior citizen

Accordingly, the overall deduction can potentially reach ₹1,00,000, depending on eligibility.

Preventive health check-up

Up to ₹5,000 can be considered for preventive health check-ups.

This ₹5,000 limit is included within the applicable Section 80D limit and is not an additional deduction over and above it.

Medical expenditure for senior citizens

Eligible medical expenditure of up to ₹50,000 may be considered where a prescribed senior citizen is not covered by health insurance, subject to Section 80D conditions.

Section 80DD – Dependant with disability

Section 80DD applies to eligible resident individuals and HUFs in respect of qualifying expenditure or payments relating to a dependant with disability.

• ₹75,000 for disability
• ₹1,25,000 for severe disability of 80% or more

This is generally a fixed deduction subject to the prescribed eligibility and certification requirements.

Section 80DDB – Treatment of specified diseases

Section 80DDB provides a deduction to qualifying resident individuals or HUFs for eligible medical expenditure incurred for treatment of specified diseases.

• Up to ₹40,000 ordinarily
• Up to ₹1,00,000 where the person for whom expenditure is incurred is a senior citizen

The deduction is subject to the conditions and adjustments prescribed under Section 80DDB.

Section 80E – Interest on higher education loan

Section 80E provides a deduction for interest paid on an eligible loan taken for higher education of the taxpayer or specified relative.

There is no fixed monetary ceiling on the amount of eligible interest that can be claimed.

The deduction is generally available for a maximum period of eight assessment years beginning with the year in which repayment of interest starts, or until the interest is fully paid, whichever is earlier.

Section 80G – Donations to approved funds and institutions

Section 80G provides deductions for eligible donations to prescribed funds, charitable institutions and other approved entities.

Depending on the recipient, a donation may qualify for:

• 100% deduction without qualifying limit
• 50% deduction without qualifying limit
• 100% deduction subject to qualifying limit
• 50% deduction subject to qualifying limit

Cash donation restriction

No Section 80G deduction is available for a donation made in cash exceeding ₹2,000.

Section 80GG – Deduction for rent paid

Section 80GG may be available to eligible taxpayers paying rent for residential accommodation where HRA exemption is not available and other prescribed conditions are satisfied.

The deduction is the lowest of:

1. Rent paid minus 10% of adjusted Total Income
2. ₹5,000 per month
3. 25% of adjusted Total Income

Form 10BA

A taxpayer claiming Section 80GG must furnish Form 10BA as prescribed.

Section 80GGA – Donations for scientific research or rural development

Section 80GGA provides a deduction for eligible donations towards specified scientific research, rural development and certain other approved activities.

• No deduction is available for a cash donation exceeding ₹2,000.
• The deduction is generally not available where Gross Total Income includes income chargeable under Profits and Gains of Business or Profession.

Section 80GGC – Contributions to political parties or electoral trusts

Eligible taxpayers may claim a deduction for qualifying contributions made to registered political parties or electoral trusts, subject to the applicable conditions.

No deduction is available where the contribution is made in cash.

Section 80TTA – Interest on savings accounts

Section 80TTA provides a deduction of up to ₹10,000 for qualifying interest earned on savings accounts with eligible:

• Banks
• Co-operative societies carrying on banking business
• Post offices

Section 80TTA does not ordinarily cover fixed-deposit interest.

Section 80TTB – Interest income of resident senior citizens

Section 80TTB provides a deduction of up to ₹50,000 to eligible resident senior citizens in respect of qualifying deposit interest.

Unlike Section 80TTA, the deduction may cover eligible savings-account as well as fixed or time-deposit interest.

Section 80U – Taxpayer with disability

Section 80U applies to an eligible resident individual certified as a person with disability.

• ₹75,000 for disability
• ₹1,25,000 for severe disability of 80% or more

Prescribed disability certificates and related details may be required while claiming the deduction.

Section 80QQB – Royalty income of authors

An eligible resident individual author may claim a deduction for qualifying royalty or copyright income from specified books other than textbooks.

The maximum deduction is generally ₹3,00,000, subject to Section 80QQB conditions.

Section 80RRB – Royalty on patents

An eligible resident individual patentee may claim a deduction for qualifying royalty income from eligible patents.

The maximum deduction is generally ₹3,00,000, subject to Section 80RRB conditions.

Section 80EE – Additional home-loan interest

Section 80EE provides an additional deduction of up to ₹50,000 for qualifying housing-loan interest.

However, this is effectively a legacy deduction because the qualifying loan must have been sanctioned between:

1 April 2016 and 31 March 2017

Eligible taxpayers with qualifying existing loans may continue to claim the deduction subject to all prescribed conditions.

Section 80EEA – Interest on certain affordable housing loans

Section 80EEA provides an additional deduction of up to ₹1,50,000 for qualifying interest on eligible residential house-property loans.

The loan must have been sanctioned between:

1 April 2019 and 31 March 2022

Accordingly, the deduction is relevant to qualifying existing loans and is not available merely because a taxpayer obtains a new affordable-housing loan today.

Section 80EEB – Interest on electric vehicle loans

Section 80EEB provides a deduction of up to ₹1,50,000 for eligible interest paid on a loan taken to purchase an electric vehicle.

The loan must have been sanctioned between:

1 April 2019 and 31 March 2023

Therefore, a new electric-vehicle loan sanctioned after 31 March 2023 does not qualify merely because the vehicle is electric.

Section 80CCH – Agniveer Corpus Fund

Section 80CCH applies to an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund.

A deduction may be available for:

• The whole of the eligible amount paid or deposited by the Agniveer into the fund
• The eligible contribution made by the Central Government to the individual's account

Section 80CCH is particularly relevant because it is one of the limited Chapter VI-A deductions that continues to be permitted under the new tax regime.

Important Chapter VI-A deduction limits at a glance

Documents and details required while claiming deductions

Income Tax Return utilities may require detailed information for several deductions. Depending on the deduction claimed, taxpayers should keep details such as:

• Policy number or investment details for Section 80C
• PRAN and contribution details for NPS
• Insurer name, policy number and premium amount for Section 80D
• Loan account number, lender details, sanction date and interest details for Sections 80E, 80EE, 80EEA and 80EEB
• Form 10BA details for Section 80GG
• Donation details and receipts for Sections 80G and 80GGA
• Disability certificate and prescribed supporting information, where applicable

Taxpayers should retain the supporting documents even where they are not required to be physically attached to the Income Tax Return.

Common mistakes while claiming Chapter VI-A deductions

1. Claiming Section 80C under the new tax regime

Section 80C is generally not available where the taxpayer continues under the new tax regime.

2. Treating every mutual fund as an 80C investment

Ordinary mutual fund investments do not automatically qualify. Only eligible investments such as qualifying ELSS schemes may satisfy Section 80C conditions.

3. Treating preventive health check-up as an additional ₹5,000 deduction

The ₹5,000 preventive health check-up limit forms part of the applicable Section 80D ceiling.

4. Claiming Section 80TTA on fixed deposits

Section 80TTA generally applies to qualifying savings-account interest and not ordinary fixed-deposit interest.

5. Claiming Sections 80EE, 80EEA or 80EEB for new loans

These provisions contain specific historical loan-sanction periods. Having a new housing or electric-vehicle loan does not automatically create eligibility.

6. Making large donations in cash

Cash donations exceeding ₹2,000 do not qualify under Sections 80G and 80GGA. Section 80GGC does not permit a deduction for cash contributions.

Income-tax Act, 2025 – What changes from 1 April 2026?

The section numbers discussed above apply to the return for FY 2025-26 / AY 2026-27, which continues to be governed by the Income-tax Act, 1961.

From 1 April 2026, the Income-tax Act, 2025 applies to Tax Year 2026-27. The deduction provisions have been reorganised under the new legislation.

Accordingly, taxpayers should use the provisions and section numbering applicable to the relevant year rather than assuming that the section numbers under the Income-tax Act, 1961 continue unchanged under the Income-tax Act, 2025.

Conclusion

Chapter VI-A provides several deductions, but their availability depends on the tax regime, taxpayer category, residential status, type of expenditure or investment and specific statutory conditions.

For AY 2026-27, taxpayers choosing the old tax regime may continue to access a broader range of deductions such as Sections 80C, 80D, 80E, 80G and 80GG. In comparison, taxpayers under the default new tax regime have access to only a limited set of Chapter VI-A deductions.

Before claiming a deduction, taxpayers should verify the applicable limit, eligibility conditions, supporting documents and the tax regime selected in their Income Tax Return.

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