Chapter VI A Deductions
February 07 , 2013

The government often uses income tax rules as a way to encourage 'good' behaviour. Some 'good' behaviours are investing for the long term, protecting oneself and family through insurance, contributing to social and economic activities. Deductions under sections 80C to 80U deal with these and are clubbed under Chapter VI A.

Each of the sections under chapter VI-A are described in short below:

Exemptions meant to encourage savings and investment

Section 80C

Exemption on investments such as ELSS, PPF, NSC, ULIPs, tax saving FDs and expenses like principal component of home loan, tution fee of children are covered under this. Up to Rs 1 lakh rebate is allowed under section 80C.

Exemptions given for personal spending

Section 80D

This covers premium on medical insurance taken by you for yourself, spouse, dependent children and parents. In all up to Rs 30,000 can be claimed under section 80D and if you or parents are senior citizens this goes up to Rs 35,000.

Section 80DD

If you are paying for medical care, training and rehabilitation of a disabled dependent or are contributing to annuity for her you can claim a flat Rs 50,000 deduction for this under section 80DD. If the disability is 80% or more this can be a flat Rs 1 lakh.

Section 80DDB

For medical treatment for yourself or dependents relating to certain diseases like cancer, AIDS, kidney failure and so on, you can claim tax rebate by up to Rs 40,000. If the person is a senior citizen up to Rs 60,000 can be claimed for tax exemption under section 80DDB.

Section 80E

Any amount of interest that you pay towards education loan for self, spouse, child or the person whose legal guardian you are reduces your taxable income by that amount. You can claim this rebate for 8 consecutive years under section 80E.

Section 80GG

If your company does not pay HRA you can claim tax exemption on the rent you pay under section 80GG. The rebate is a minor one of maximum Rs 2000 per month.

Section 80U

Fixed tax rebate of Rs 50,000 can be availed by a person with disability on her income. If the disability is severe Rs 1 lakh can be claimed as deduction under this section.

All of these deductions are meant for individuals and HUFs. The amount spent on chapter VIA can be deducted from your gross total income and your total income (taxable income) can be lowered to that extent. You can get these benefits either by submitting proofs of investments/expenses to HR so they apply less TDS on your salary or if you miss it you can claim deduction while filing tax returns.

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