Deductions under chapter VI-A

Deductions under Chapter VI-A: A Practical Guide for FY 2026-27

Chapter VI-A of the Income Tax Act, 1961 houses every major deduction available to individual taxpayers in India — from the omnibus Section 80C to the niche Section 80DDB for specified diseases. For FY 2026-27 (Assessment Year 2027-28), the new tax regime under Section 115BAC is the default, and it disallows nearly all Chapter VI-A deductions. Before you let the default govern your filing, you need to know exactly what you are surrendering — and whether the lower slab rates actually compensate for it. This guide gives you the numbers, worked examples, and a record-keeping checklist to make that call with confidence.

What Chapter VI-A Does — and What Changed in FY 2026-27

Chapter VI-A groups deductions in one place so that gross total income, after reducing these amounts, becomes your taxable income. These are deductions from income, not from tax — so a Rs. 1.5 lakh deduction saves you Rs. 45,000 in tax if you are in the 30% slab, not Rs. 1.5 lakh.

The critical FY 2026-27 reality: the new regime under Section 115BAC is now the default. If you file your ITR without explicitly opting for the old regime, the system processes you under the new regime automatically. You lose access to:

• Section 80C, 80CCC, 80CCD(1) — all savings-linked deductions
• Section 80D — health insurance premiums
• Section 80E — education loan interest
• Section 80G — donations to charitable institutions
• Section 80TTA and 80TTB — interest income deductions
• Section 80GG — rent paid where HRA is not received
• Section 80U, 80DD, 80DDB — disability and specified disease deductions

The one Chapter VI-A deduction that survives the new regime is Section 80CCD(2) — your employer's NPS contribution, subject to 10% of basic plus dearness allowance (14% for central government employees). The standard deduction of Rs. 75,000 also continues for salaried taxpayers and pensioners under the new regime.

The decision framework is straightforward: map your credible, documentable deductions under the old regime, add HRA exemption and home loan interest if applicable, and compare the resulting tax against the new regime's tax on a slightly higher base. If the aggregate of all exemptions and deductions exceeds roughly Rs. 3.75 lakh to Rs. 4.5 lakh (depending on income), the old regime generally produces a lower outflow.

Section 80C: The Rs. 1.5 Lakh Workhorse

Maximum deduction: Rs. 1,50,000 per financial year — for individuals and HUFs both.

Section 80C is a basket deduction: multiple qualifying investments and payments all draw from the same Rs. 1.5 lakh pool. Once you hit Rs. 1.5 lakh across all instruments combined, the cap applies, regardless of how many instruments you use.

Eligible instruments

What most people miss

Stamp duty and registration fees count in the year you pay them, not the year of possession. If you registered a property in March 2027, those fees are eligible for FY 2026-27 deduction — even if possession comes later.

Life insurance premium cap: A policy with a sum assured of Rs. 20 lakh and an annual premium of Rs. 3 lakh is only partially eligible. The limit is 10% of sum assured = Rs. 2 lakh. You can claim only Rs. 2 lakh of the Rs. 3 lakh premium paid.

Joint home loan: Both co-borrowers can independently claim up to Rs. 1.5 lakh each on the principal repayment component, proportionate to their actual repayment share. On a joint loan with equal repayment shares, the household's aggregate 80C benefit from principal repayment alone can be Rs. 3 lakh.

NPS Tier-I contributions under Section 80CCD(1) are subsumed within the Rs. 1.5 lakh limit. The additional Rs. 50,000 comes from Section 80CCD(1B), discussed next.

Section 80D: Health Insurance Deductions — Know Your Exact Limits

Section 80D provides a deduction for health insurance premiums paid during the financial year. The limits are tiered by the insured person's age.

Limits at a glance for FY 2026-27

A taxpayer aged 38 with parents aged 65 can claim up to Rs. 25,000 (self-family) + Rs. 50,000 (senior citizen parents) = Rs. 75,000. If the taxpayer is also 60+, the maximum combined claim rises to Rs. 1,00,000.

Preventive health check-up: Up to Rs. 5,000 within the applicable limit — this is not in addition to the cap. Cash payment is allowed for preventive check-up only; all other premium payments must be non-cash.

No insurance for senior citizen parents? If your parents are 60 or above and are not covered by any health insurance policy, actual medical expenditure incurred for them is deductible up to Rs. 50,000. Maintain bills, pharmacy receipts, and doctor prescriptions to substantiate this.

What disqualifies:

• Premiums paid in cash for any health policy (other than preventive check-up)
• Group health insurance premiums paid entirely by the employer — you must have actually borne the cost
• Premiums for siblings, in-laws, or non-dependent adult children

Section 80CCD(1B): The Extra Rs. 50,000 That Belongs in Every High-Income Portfolio

Section 80CCD(1B) provides a deduction of up to Rs. 50,000 for voluntary contributions to your NPS Tier-I account, over and above the Rs. 1.5 lakh Section 80C ceiling.

The arithmetic is simple. If you are in the 30% slab under the old regime, contributing Rs. 50,000 to NPS Tier-I saves:

• Tax saved: Rs. 50,000 × 30% = Rs. 15,000
• Cess saved: Rs. 15,000 × 4% = Rs. 600
• Net annual saving: Rs. 15,600 — on an investment you are making into a retirement account regardless

The contribution must be to your own NPS Tier-I account, not a Tier-II account, and not your spouse's account. Contributions appear in your Annual Information Statement (AIS) on the income tax portal under the "SFT" category and are verifiable at the time of assessment.

Section 80CCD(2) — survives the new regime: Your employer's NPS contribution up to 10% of basic + DA (14% for central government employees) is deductible under Section 80CCD(2). This deduction does not come out of your personal investment. If your employer runs an NPS programme, verify this appears on your Form 12BA and in your AIS/TIS on the income tax e-filing portal (incometax.gov.in).

Section 80G: Donations — Claim It, But Get the Paperwork Right

Section 80G allows deductions for donations to specified funds and approved charitable institutions. The deduction rate — 50% or 100% — and whether a qualifying limit applies depend on which category the recipient organisation falls under.

The four operative categories

1. 100% deduction, no qualifying limit: PM National Relief Fund, PM CARES Fund, National Defence Fund, Chief Minister's Earthquake Relief Fund. Donate Rs. 1,00,000 — claim Rs. 1,00,000.
2. 50% deduction, no qualifying limit: Jawaharlal Nehru Memorial Fund, Indira Gandhi Memorial Trust, Rajiv Gandhi Foundation.
3. 100% deduction, with qualifying limit: Certain approved charitable institutions registered under Section 80G(5).
4. 50% deduction, with qualifying limit: General approved institutions.

The "qualifying limit" for categories 3 and 4 means your total donation deduction cannot exceed 10% of your adjusted gross total income. Donations beyond this threshold yield no additional benefit in the year.

Form 10BE is mandatory. For AY 2027-28, the donee institution must furnish Form 10BE to you by 31 May 2027. Without Form 10BE, your Section 80G claim will be disallowed during processing — the receipt alone is insufficient from AY 2022-23 onwards.

Cash donations above Rs. 2,000 are not deductible. Pay by UPI, cheque, NEFT, or bank draft for anything above Rs. 2,000.

Before donating to an institution that promises 80G benefits, verify its registration number on the income tax portal's "Tax Exempt Institutions Search" function. Registration must be valid as at the date of donation.

Section 80E: Education Loan Interest — No Upper Limit, Eight Years

Section 80E allows deduction of the interest component of an education loan with no upper cap on the amount. It is the only uncapped deduction in Chapter VI-A.

Conditions:

• Loan must be from a scheduled bank or an approved charitable institution — not a family member or unregistered lender
• Must be for higher education (graduation, post-graduation, or vocational course after Class 12)
• Can be for the taxpayer, their spouse, children, or a student for whom the taxpayer is the legal guardian
• Only interest qualifies — principal repayment does not
• Available for 8 consecutive years from the year repayment starts, or until interest is fully repaid, whichever is earlier

Worked example: Radhika took an education loan in 2021 for her MBA. She began repaying in FY 2023-24. Her loan interest for FY 2026-27 is Rs. 1,10,000. This is her fourth repayment year; she has four more years of eligibility. At a 30% effective rate under the old regime, her Section 80E deduction saves her Rs. 1,10,000 × 30% × 1.04 (cess) = Rs. 34,320 this year — with no upper limit applied.

Each year, obtain an interest and principal split certificate from your lender. Banks typically issue this in April or May for the preceding financial year.

Other Chapter VI-A Deductions You Should Not Overlook

Section 80TTA and 80TTB — Interest income

• Section 80TTA: For individuals below 60, interest on savings accounts (banks, co-operative banks, post offices) up to Rs. 10,000 is deductible. Does not cover FD interest.
• Section 80TTB: For individuals aged 60 and above, interest on all deposits — savings, fixed, and recurring — is deductible up to Rs. 50,000. This replaces 80TTA for senior citizens; the two cannot be claimed simultaneously.

Section 80U — Disability (self)

If you hold a valid disability certificate under the Rights of Persons with Disabilities Act, 2016:

• Rs. 75,000 flat deduction for disability (40%–79% impairment)
• Rs. 1,25,000 for severe disability (80% or more)

This is a flat deduction regardless of actual medical expense incurred. The certificate must be current and issued by a medical authority recognised for this purpose.

Section 80DD — Disabled dependant

Mirrors 80U but applies to medical expenditure and insurance premium for a disabled family member who is dependent on you. Deductions are Rs. 75,000 and Rs. 1,25,000 for severe disability. You cannot claim both 80DD and 80U for the same individual.

Section 80DDB — Specified diseases

Deduction for medical treatment of specified serious illnesses (cancer, chronic renal failure, haematological disorders, AIDS, neurological diseases listed in Rule 11DD):

• Rs. 40,000 for taxpayers below 60
• Rs. 1,00,000 for senior citizens

A prescription from a specialist registered with the National Medical Commission (formerly MCI) is required. The institution where treatment is undertaken must also be specified.

Section 80GG — Rent paid where HRA is not received

Self-employed individuals and salaried employees who do not receive HRA can claim actual rent paid under Section 80GG. The deduction is the least of:

1. Rs. 5,000 per month (Rs. 60,000 per year)
2. 25% of adjusted total income
3. Actual rent paid minus 10% of adjusted total income

File Form 10BA declaring the rent details before claiming this deduction. You cannot claim Section 80GG if you, your spouse, or your minor child owns residential property in the city where you are employed.

New Regime vs Old Regime for FY 2026-27: Run the Numbers

The new regime under Section 115BAC offers graduated slab rates with lower percentages across income bands, a Rs. 75,000 standard deduction for salaried taxpayers, and a Section 87A rebate that makes income up to Rs. 12 lakh effectively zero-tax (subject to the applicable Finance Act). The old regime allows all Chapter VI-A deductions plus HRA, LTA, and home loan interest, but applies steeper slab rates.

New regime applicable slab rates (as per Finance Act 2025; confirm amendments under Finance Act 2026 as applicable):

Old regime slab rates (unchanged): 0–2.5L nil; 2.5–5L at 5%; 5–10L at 20%; above 10L at 30%.

Worked example — Rs. 12 lakh salaried, no HRA

Arjun, age 38, gross salary Rs. 12 lakh, no rent, no home loan, maximum Chapter VI-A investments.

Old regime calculation: 0–2.5L nil; 2.5–5L at 5% = Rs. 12,500; 5–9L at 20% = Rs. 80,000. Total Rs. 92,500. New regime calculation: 0–4L nil; 4–8L at 5% = Rs. 20,000; 8–11.25L at 10% = Rs. 32,500. Total Rs. 52,500.

Verdict: New regime saves Arjun Rs. 41,600 per year even after claiming Rs. 2.5 lakh in genuine Chapter VI-A deductions.

Worked example — Rs. 18 lakh salaried with HRA and education loan

Kavitha, age 42, gross salary Rs. 18 lakh, HRA exempt Rs. 1,80,000, education loan interest Rs. 90,000, Section 80D for self + senior citizen parents Rs. 75,000.

Old regime: 0–2.5L nil; 2.5–5L Rs. 12,500; 5–10L Rs. 1,00,000; 10–13.05L at 30% = Rs. 91,500. Total Rs. 2,04,000. New regime: 0–4L nil; 4–8L Rs. 20,000; 8–12L Rs. 40,000; 12–16L Rs. 60,000; 16–17.25L at 20% = Rs. 25,000. Total Rs. 1,45,000.

Verdict: Even with Rs. 4.95 lakh in total old-regime benefits (HRA + 80C + 80D + 80CCD(1B) + 80E), the new regime saves Kavitha Rs. 61,360. The old regime begins to consistently outperform at very high incomes — typically Rs. 25 lakh and above — when all deductions are fully claimed and significant HRA or home loan interest is in play.

Common Mistakes That Cost Real Money

1. Treating 80CCD(1B) as part of 80C. They are separate. If you have already invested Rs. 1.5 lakh in PPF and ELSS, contributing an additional Rs. 50,000 to NPS Tier-I gives you Rs. 50,000 more in deduction — not zero.

2. Missing Form 10BE and losing the entire 80G claim. The institution must issue Form 10BE on the TRACES portal. If they have not, follow up before filing your ITR. Many small NGOs are still learning this compliance requirement.

3. Claiming 80D for insurance premiums paid in cash. A single year's error here flags in AIS reconciliation and can trigger a mismatch notice. Even Rs. 25,000 in disallowed deduction at the 30% slab is Rs. 7,800 in additional tax demand.

4. Forgetting the old regime opt-in deadline for salaried employees. If your employer's payroll system defaults to the new regime and you want the old regime, you must inform your employer in writing at the start of the financial year. You can still switch when filing your ITR, but you lose the benefit of correct TDS deduction throughout the year — leading to a refund situation or year-end shortfall.

5. Claiming Section 80C on NSC accrued interest without computing it correctly. NSC interest accrues annually and is both taxable (added to income) and simultaneously deductible under 80C as a deemed reinvestment. Many taxpayers either miss the income addition or miss the 80C reinvestment claim.

6. Claiming Section 80GG while owning property in the same city. Ownership by your spouse or minor child also disqualifies you. If you rent in Mumbai while your spouse owns a flat in the same city, Section 80GG does not apply — even if you live separately.

Record-Keeping That Survives a Faceless Assessment

Chapter VI-A deductions are routinely examined in faceless assessments under Section 144B and in regular scrutiny proceedings. Your AIS and Form 26AS (available on incometax.gov.in) automatically capture institutional transactions — ELSS purchases, PPF credits, NPS contributions, bank FDs, and insurance premiums paid electronically. But the burden of proof remains on you.

Maintain one folder per Assessment Year (label it AY 2027-28) with:

• Section 80C: EPF and PPF passbook entries or statements; ELSS account statements; NSC certificate; bank-issued tax-saving FD certificate; life insurance premium receipts; home loan statement showing principal breakup; stamp duty challan and registration receipt; fee receipts for children's tuition
• Section 80D: Insurance policy schedule and annual premium receipt (non-cash); preventive health check-up bills (cash allowed); medical bills if claiming for uninsured senior citizen parents
• Section 80CCD(1B): NPS contribution receipt (PRAN statement or NSDL-issued acknowledgement)
• Section 80G: Form 10BE from the donee institution; payment proof via bank or UPI (amount, date, institution name)
• Section 80E: Annual interest certificate from the lender showing the interest and principal split for the financial year
• Section 80U / 80DD: Disability certificate from the notified medical authority; renewal documents if the certificate has a validity period

Retention period: Maintain originals (or clear digital scans) for at least eight years from the end of the relevant assessment year. For AY 2027-28, retain until 31 March 2036. Section 149 of the Income Tax Act allows reassessment notices up to ten years in certain cases involving large income escaping assessment.

Special Situations: HUF, Senior Citizens, and Persons with Disability

HUF — independent 80C of Rs. 1.5 lakh

A Hindu Undivided Family is a separate assessable entity. The HUF has its own Section 80C ceiling of Rs. 1.5 lakh, entirely independent of the karta's personal limit. A karta investing Rs. 1.5 lakh in PPF personally and the HUF investing Rs. 1.5 lakh in a tax-saving FD is a combined family deduction of Rs. 3 lakh — perfectly legitimate, subject to the HUF having its own PAN and income.

Senior citizens (60 and above)

Senior citizens enjoy enhanced limits across multiple sections:

• Section 80D: Rs. 50,000 for self (instead of Rs. 25,000)
• Section 80TTB: Rs. 50,000 on all deposit interest (replaces 80TTA's Rs. 10,000)
• Section 80DDB: Rs. 1,00,000 for specified disease treatment (versus Rs. 40,000 for others)

For a senior citizen with modest income from deposits and a health insurance policy, the old regime almost invariably outperforms the new regime — the combination of 80D and 80TTB alone can exceed Rs. 1 lakh in deductions.

Persons with disability

Section 80U (self) and Section 80DD (dependant) provide flat deductions of Rs. 75,000 or Rs. 1,25,000 without requiring documentation of actual expenditure — only the disability certificate. If you or a family member has a recognised disability, ensure the certificate is current, issued by the notified authority, and filed with your ITR documentation. This deduction is one of the strongest arguments for retaining the old regime.

Key Takeaways

• Section 80C caps at Rs. 1.5 lakh across all qualifying instruments — ELSS, PPF, LIC, NSC, tuition fees, principal repayment and more.
• Section 80CCD(1B) is separate from and additional to 80C: up to Rs. 50,000 more for NPS Tier-I contributions, saving up to Rs. 15,600 annually at the 30% slab.
• Section 80D allows up to Rs. 1,00,000 combined (self + senior citizen parents); cash premiums disqualify the claim except for preventive health check-ups.
• Section 80G requires Form 10BE — without it, the deduction is not creditable regardless of the receipt you hold.
• Section 80E is uncapped, runs for 8 years from first repayment, and covers interest only — obtain the annual split certificate from your lender every year.
• The new regime is default for FY 2026-27. Opt for the old regime only if your total verified deductions (Chapter VI-A plus HRA, LTA, home loan interest) justify the switch — run both computations with actual numbers, not approximations.
• Document everything. AIS captures most institutional flows, but the assessment burden lies with you. Retain originals for eight years from the end of the relevant AY.