Chapter VI-A Deductions — 80C, 80D, 80CCD, and the Regime Decision

Learning Objectives

• List the principal Chapter VI-A deductions and their monetary limits
• Identify which deductions are available only in the old regime vs both
• Apply the Section 80C combined limit to a realistic taxpayer
• Compute final tax liability for Kiran Sharma under both regimes for FY 2025-26
• Use the regime decision framework to pick the optimal regime for a given income profile

What Is Chapter VI-A?

Chapter VI-A (Sections 80A to 80U) contains deductions that reduce Gross Total Income (GTI) to arrive at Net Total Income — the actual taxable figure.

This is the single biggest factor in the regime decision.

Section 80C — The Most Used Deduction

Maximum deduction: ₹1,50,000 per year (combined limit across all qualifying instruments)

The ₹1,50,000 is a combined ceiling — you cannot claim ₹1.5L under EPF and another ₹1.5L under PPF. Total across all instruments is capped at ₹1.5L.

Available in old regime only.

Section 80CCD — NPS Contributions

Section 80CCD(1) — Within the 80C Limit

Employee contributions to NPS Tier-I are deductible under 80CCD(1) — but this counts towards the ₹1,50,000 ceiling of Section 80C.

Section 80CCD(1B) — Additional ₹50,000

An additional deduction of up to ₹50,000 for self-contributions to NPS Tier-I under 80CCD(1B) is available over and above the ₹1,50,000 of Section 80C.

Section 80CCD(2) — Employer's NPS Contribution

Employer contributions to an employee's NPS account are deductible:

• For central/state government employees: up to 14% of basic + DA
• For other employees: up to 10% of basic + DA

This is available in the new regime. It is one of the very few deductions that survive.

Section 80D — Health Insurance (Mediclaim)

Premium must be paid by any mode other than cash. Preventive health check-up costs up to ₹5,000 within the above limits can be paid in cash.

Available in old regime only.

Other Key Chapter VI-A Deductions (Old Regime Only)

Section 80G — Donations

Donations above ₹2,000 in cash do not qualify — must be cheque/NEFT/UPI.

Section 80TTA — Savings Bank Interest (Non-Seniors)

Deduction up to ₹10,000 on interest from savings accounts with banks, co-operative societies, and post offices. Not applicable to FD interest. For individuals below 60.

Section 80TTB — Senior Citizen Interest

For taxpayers aged 60+, deduction up to ₹50,000 covers interest from ALL deposits (savings, FD, recurring). Section 80TTA does not apply if 80TTB is claimable.

Section 80E — Education Loan Interest

Interest on a loan for higher education of self, spouse, children, or a legal ward — 100% deductible with no ceiling. Applies for 8 consecutive years from the year repayment begins.

Section 80EEA — Additional Home Loan Interest

Additional ₹1,50,000 on home loan interest for loans sanctioned between 1 April 2019 and 31 March 2022 (stamp duty value ≤ ₹45L, first-time buyer). Loans sanctioned after 31 March 2022 do not qualify for 80EEA — they rely solely on Section 24(b).

New Regime — Full Survival Table

Regime Decision Tree

Is your income mainly from salary with an employer NPS contribution?
  YES → New regime favoured (only 80CCD(2) matters; employer gets deduction)

Do your old-regime-only deductions exceed ₹3,50,000?
  YES → Compute both; old regime likely better
  NO  → New regime likely better

Quick check for salaried taxpayers:
  If 80C + 80D + HRA exemption + home loan interest (Sec 24b) > ₹3,75,000
    → Old regime often wins
  Otherwise
    → New regime often wins

For business owners with significant investments + home loan:
  Always compute both — the crossover point shifts based on income level

Case Study — Kiran Sharma's Regime Choice (FY 2025-26)

Complete Income Picture

From Lessons 2 and 3:

Kiran's Investments and Old-Regime Deductions

Kiran has the following investments qualifying under Chapter VI-A:

Old Regime — Net Taxable Income and Tax

Tax on ₹6,44,000 (old regime slabs):

No Section 87A rebate — income ₹6,44,000 > ₹5,00,000 threshold for old regime.

New Regime — Net Taxable Income and Tax

Tax on ₹9,75,000 (new regime, FY 2025-26 slabs):

Section 87A: Net taxable income ₹9,75,000 ≤ ₹12,00,000 → full rebate of ₹37,500.

Tax after rebate = ₹0. Cess = ₹0. Total tax (new regime) = ₹0.

Comparison

Conclusion: New regime saves Kiran ₹42,952 for FY 2025-26. The Section 87A rebate at the ₹12L threshold is extremely powerful at Kiran's income level — it wipes out all tax despite higher gross taxable income. His ₹1,75,000 in old-regime deductions is not sufficient to overcome this advantage.

Practice Exercises

Key Terms

Module Summary

• Chapter VI-A deductions are available almost exclusively under the old regime — with only 80CCD(2) and 80CCH surviving in the new regime.
• Section 80C cap is ₹1,50,000 regardless of how many qualifying instruments are used.
• Section 80CCD(1B) — an additional ₹50,000 for NPS — is old regime only from FY 2025-26.
• Section 80D: ₹25,000 for self/family; ₹50,000 for senior citizen parents — old regime.
• Kiran Sharma's optimal regime for FY 2025-26 is the new regime — Section 87A rebate reduces his total tax to ₹0 (vs ₹42,952 under old regime).
• The old regime typically wins only when total old-regime-specific deductions exceed ₹3.5–4L for mid-income taxpayers.

Quick Quiz

Next up: Module 6 — ITR Forms — How to select the correct ITR form for each taxpayer profile, including Sunrise Retail (ITR-6) and Kiran Sharma (ITR-3), the e-filing portal workflow, and due dates for AY 2026-27.