Guntas Kaur
Chapter VI-A of the Income Tax Act covers deductions under Sections 80C to 80U, offering relief for specified investments, contributions, and expenses; however, most of these deductions are unavailable under the new regime of Section 115BAC. Taxpayers commonly face issues such as incorrect documentation, wrong section selection, exceeding prescribed limits, and lack of awareness of amendments or judicial interpretations. Key errors include exceeding the overall ₹1.5 lakh limit for Sections 80C to 80CCD(1), misreporting NPS details, cash payments under Section 80D, claiming ineligible donations under Section 80G, and incorrect claims under Sections 80TTA and 80TTB. Mistakes also arise when deductions are claimed despite opting for the new regime. GTI-related restrictions under Sections 80A and 80G are often overlooked, and missing or late documentation frequently leads to disallowances. A High Court ruling clarified that debatable claims with full disclosure cannot amount to misreporting under Section 270A. Proper planning, documentation, and regime selection are essential to avoid scrutiny.
Chapter VI‑A of the Income Tax Act provides insights related to Sections 80C to 80U, for deductions against GTI for specified investment, contributions and expenses which can be explained as under. It generally comprises following sections:
|
• 80C, • 80E. • 80GG |
• 80CCC. • 80TTA. • 80U |
• 80CCD, • 80TTB • and 80D . |
- Under the new tax regime, most of these deductions are not available under Section 115BAC.
Practical Issues in Claiming Deductions
√ Most of the people face complications due to:-
√ Incorrect documentation
√ wrong selection of sections
√ exceeding prescribed limits
√ Or ignorance about recent amendments
√ And judicial interpretations.
Most disallowances can be avoided through proper planning and keeping of records.
Specific Problem Areas include :-
1. Sections 80C, 80CCC, and 80CCD
A common mistake that people do is aggregating all investments eligible under these sections; without verifing that the overall limit of ₹1.5 lakh (as contained in Section 80CCE) is not exceeded.
An additional deduction under Section 80CCD(1B) for NPS up to ₹ 50,000 is allowed over and above this limit, provided the payment is supported by valid proof such as CRA or employer statements.
2. Section 80D – Health Insurance Premiums
Deductions are often denied because the premiums have been paid in cash, as only non‑cash payments are allowable, except up to ₹5,000 for preventive check‑ups. Errors also arise when the premium amount paid for self/family and for parents is not correctly distinguished, or receipts fail to highlight who made the payment and for whom.
3. Section 80G – Donations
Donations in excess of ₹ 2,000 in cash or to non-approved institutions are not allowed as deduction. Receipts need to specify the name of the donor, PAN, registration number of the trust, and mode of payment. Taxpayers very often do not remember the 10% cap of adjusted GTI for donations entitled to 50% deduction, resulting in partial disallowance while processing.
3. Sections 80TTA and 80TTB – Interest on Deposits
Non‑senior citizens sometimes claim deduction under Section 80TTA for interest on fixed deposits, though the benefit is applicable only for savings account interest up to ₹10,000. Similarly, senior citizens also at times claim both 80TTA and 80TTB, though 80TTB (up to ₹50,000) replaces 80TTA for them.
Regime Selection under Section 115BAC
A common mistake, which results in worst outcomes , is when the taxpayers have opted for the new regime under Section 115BAC(1A) but still claim deductions under Chapter VI‑A, mostly inapplicable. This results in automatic disallowance by CPC and may result in mismatches with Form 16, in case the employer had considered the old regime.
GTI‑Related Conditions
Deductions under Chapter VI‑A cannot exceed the Gross Total Income (Section 80A). Some of the provisions use “adjusted GTI” for computing eligible limits, such as Section 80G. Taxpayers deriving only special incomes, like short‑term capital gains under Section 111A or lottery winnings, sometime make a mistaken claim for full deduction though the said income is excluded while computing ceilings.
Documentation and Timing
One of the common reasons for rejection relates to non-availability of proof of payment on time within the concerned financial year. For example, premiums/investments made in April cannot be considered for the previous financial year even though they pertain to policies of that year. It is necessary to retain complete receipts, certificates (in respect of loans or medical claims) and proofs of non-cash payments.
- Other Notable Deduction‑Specific Issues
1. Section 80E – Education Loan Interest: No deduction shall be allowed if no interest certificate is provided by the lending institution.
2. Section 80DDB – Specified Diseases: Needs a valid medical certificate from the specialist in the given form.
3. Scrutiny Risk: Inadequate documentation typically leads to additions at the time of assessment or during penalty proposals.
Case Reference (2024 – High Court, reported in Taxmann)
The Assessing Officer had disallowed deductions under Chapter VI‑A and Section 24 and initiated penalty under Section 270A for under‑reporting. The High Court held that when a claim is debatable and the taxpayer has made full disclosure, it cannot be treated as misreporting under Section 270A(9). Thus, genuine claims with proper disclosure do not amount to concealment.
Common Individual Deductions (Old Regime)
| Section | Description | Maximum Deduction Limit |
| 80C | Specified investments and expenses | ₹1,50,000
|
| 80CCD(1B) | Additional NPS contribution | ₹50,000 |
| 80D | Health insurance | Varies as per age group |
| 80G | Donations approved | Eligible amount |
| 80TTA and 80TTB | Interest on deposits | ₹ 10,000 to ₹ 50,000 |
Practical Compliance :-
1. Option between old and new regime Section 115BAC
2. Match every deduction with proper documentation
3. Ensure paying mode complies with the statutory rules.
4. Check the limits of eligibility and ceilings (under Sections 80A and 80CCE).
5. Be transparent – full disclosure is the best way to avoid scrutiny.
Tax planning works best when disciplined documentation and knowledge of the rules that apply support it-a simple way to minimize notices and maintain compliance confidence.
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