A large portion of the Indian population consists of salaried middle-class individuals who thirst for tax-saving and tax-planning strategies. Because they are concerned about their hard-earned money, they seek better tax-saving opportunities to reduce their tax burden. The deductions listed under Chapter VI-A are one such option availed by salaried-class individuals in India. 

Purpose of Availing Chapter VI Deductions 

The purpose of availing Chapter VI-A deductions is as follows:

• Encourage saving attitude in individuals by way of PPF, LIC and many more.
• Promotes retirement planning through NPS. 
• Spread of education among the middle class with loans on education.
• Increases donations to charitable organisations. 
• Health and well-being.
• Relief for senior citizens by way of medical insurance premiums and interest on deposits. 
• Reduction in overall tax liability. 

An illustrative list of various deductions that can be availed by individuals belonging to  salaried classes are as mentioned below:

Case Study 

Let us now get into a case study to illustrate the impact of Chapter VI-A deduction in the salaried income class: 

Mr. Rahul is a 35-year-old salaried individual with an annual salary of Rs. 12,50,000 and no other income. He has made the following investments and expense deductions. 

• Life Insurance Premium: Rs. 40,000 per annum [Section 80C] 
• Employees' Provident Fund (EPF): Rs. 60,000 per annum [Section 80C]
• Public Provident Fund (PPF): Rs. 50,000 per annum [Section 80C]
• National Pension System (NPS): Rs. 50,000 per annum [Section 80CCD(1B)] 
• Medical Insurance Premium: Rs. 25,000 per annum [Section 80D]
• Interest on Education Loan: Rs. 20,000 per annum [Section 80E]
• Donations to Charitable Organisations: Rs. 10,000 [Section 80G] 
• Interest Earned on Savings Account: Rs. 8,000 [Section 80TTA] 

Calculations 

Total Deductions under Chapter VI-A 

Net Taxable Income 

Without Chapter VI-A Deductions 

• Gross Total Income: Rs. 12,00,000 (12,50,000 - 50,000 (Standard deduction))
• Tax Liability (Without deductions): Rs. 1,79,400 

With Chapter VI-A Deductions 

• Net Taxable Income: Rs. 9,37,000 (9,87,000 - 50,000 (Standard deduction))
• Tax Liability (With deductions): Rs. 90,896 

Tax Savings 

• Savings: Rs. 1,79,400 - Rs. 90,896 = Rs. 88,504 

Based on the above case study, the reduction in taxable income from Rs. 12,00,000 to Rs. 9,37,000 highlights the importance of strategic tax planning through deductions under Chapter VI-A, which can be fully utilised by the salaried class segment. 

Points to be kept while Availing Deductions under Chapter VI-A 

You have to keep in mind the following points while claiming deductions:

• There should be proper planning before availing the deductions. 
• Whenever an investment or expenditure is to be made, the supporting documents relating to the same should be preserved.

Conclusion 

To sum up, the above deductions can be availed by an individual in the salaried class who has opted to pay tax under the old tax regime. However, if a person has decided to pay tax under Section 115BAC, the above deductions cannot be availed under Chapter VI-A, except for Section 80CCD.