Chapter VI-A Deductions: Which Ones Can NRIs Claim?
- Dipali Waghmode
- Oct 13
- 9 min read
Non-Resident Indians (NRIs) earning income in India can claim selected deductions under Chapter VI-A of the Income Tax Act, 1961, to reduce taxable income. While the options are limited compared to resident taxpayers, NRIs remain eligible for key deductions such as Section 80C, 80D, 80E, 80G, and 80TTA. Understanding these allowances is essential to maximize tax savings, avoid penalties, and maintain compliance. Using a reliable tax filing platform like TaxBuddy can streamline the process, suggest eligible deductions automatically, and ensure accurate filing. This guide outlines which Chapter VI-A deductions NRIs can claim in 2025 and how to optimize their tax benefits.
Table of Contents
Understanding Chapter VI-A Deductions for NRIs
Chapter VI-A of the Income Tax Act provides a framework of deductions that help taxpayers reduce their taxable income by allowing certain investments, payments, and contributions to be subtracted from total income before tax computation. For Non-Resident Indians (NRIs), these deductions can be a significant tool to optimize tax liability. However, it is important to understand that NRIs are subject to specific provisions, and not all deductions available to resident taxpayers are accessible to them. Proper planning, awareness of eligible deductions, and compliance with documentation requirements are essential to maximize tax benefits and avoid errors that may lead to disallowance during assessment. By carefully analyzing which deductions apply to their circumstances, NRIs can ensure both compliance with the Income Tax Act and optimal tax savings.
Section 80C: Investment-Linked Deductions
Section 80C is one of the most widely used deductions under Chapter VI-A, allowing taxpayers to reduce taxable income through specified investments and payments. For NRIs, the maximum limit for claiming deductions under Section 80C is ₹1,50,000 in a financial year. Eligible investments for NRIs include contributions to life insurance premiums, Employee Provident Fund (EPF), National Savings Certificate (NSC), and tax-saving fixed deposits. Certain instruments, like the Public Provident Fund (PPF), are not available to NRIs, and attempting to claim deductions for such ineligible instruments can lead to rejection by the Income Tax Department.
To successfully claim Section 80C deductions, NRIs must ensure that all contributions comply with statutory requirements. Proper documentation, including receipts, proof of payment, and investment statements, is crucial to substantiate claims. Additionally, NRIs should prioritize instruments specifically permitted under Indian tax law to avoid compliance issues. By understanding the scope of Section 80C and focusing on eligible investment options, NRIs can take full advantage of tax-saving opportunities while staying within the legal framework, ultimately reducing their taxable income effectively.
Section 80CCC and 80CCD: Pension Contributions
Sections 80CCC and 80CCD provide deductions for contributions to pension schemes. Section 80CCC covers contributions to certain insurance company pension plans, while 80CCD includes contributions to the National Pension System (NPS). NRIs can claim a combined deduction under these sections, up to specified limits. Contributions to these schemes not only reduce taxable income but also support long-term retirement planning. Accurate tracking of contributions and proper Form 26AS verification ensures the deduction is claimed correctly.
Section 80D: Health Insurance Premiums
Section 80D allows NRIs to claim deductions on premiums paid for health insurance policies covering themselves, spouse, and dependent children. The deduction limit is up to ₹25,000 per year, which increases for senior citizens. For NRIs, it is crucial to ensure that the insurance policy is valid in India and that the premium payments are made through permissible channels. This deduction provides financial relief while promoting health coverage.
Section 80E: Education Loan Interest
Section 80E provides a deduction for interest paid on loans taken for higher education in India. NRIs who have taken an education loan for themselves, spouse, or children can claim this deduction. There is no upper limit on the interest amount, but the deduction is available only for a maximum of eight years or until the interest is paid in full, whichever is earlier. Proper documentation from the lending institution is essential to claim this deduction.
Section 80G: Donations to Charitable Institutions
Section 80G of the Income Tax Act provides taxpayers, including non-resident Indians (NRIs), the opportunity to claim deductions for donations made to specified charitable institutions, relief funds, and eligible organizations in India. The primary objective of this provision is to encourage philanthropy and support social welfare initiatives. NRIs who contribute to these approved institutions can reduce their taxable income by claiming a deduction under this section, subject to the limits and conditions prescribed by law. The amount of deduction depends on the nature of the donation: some donations qualify for a 100 percent deduction without restrictions, while others allow only a 50 percent deduction, often with qualifying limits. To claim the deduction, it is essential to maintain proper documentation, including receipts issued by the charitable institution, which should include details such as the donor’s name, the amount donated, and the registration number of the institution. Compliance with the donation rules is critical, as donations without valid receipts or made to unapproved organizations will not qualify for deduction.
Section 80TTA: Savings Bank Interest for NRIs
Section 80TTA allows taxpayers, including NRIs, to claim deductions on interest earned from savings bank accounts maintained with scheduled banks in India, up to a maximum of ₹10,000 per financial year. This deduction applies specifically to interest from savings accounts and does not extend to interest earned on fixed deposits, recurring deposits, or other investment instruments. The purpose of this provision is to provide relief on interest income earned from regular savings accounts, helping to reduce the overall tax liability. For NRIs, it is important to ensure that the savings account is maintained in India and that the interest is correctly reported in their income tax return. Accurate calculation of interest is necessary, and taxpayers should rely on bank statements, passbooks, or Form 26AS, which reflects the total interest credited and any TDS deducted by the bank. By properly claiming this deduction, NRIs can optimize their taxable income and ensure compliance with the Income Tax Act while benefiting from eligible tax relief.
Deductions Not Available for NRIs
Deductions under Chapter VI-A provide significant tax-saving opportunities for resident taxpayers, but non-resident Indians (NRIs) face certain restrictions when it comes to claiming these benefits. While NRIs can claim some deductions, there are specific provisions and schemes that are designed exclusively for resident individuals, making them ineligible for NRIs.
For example, contributions made to the Public Provident Fund (PPF) are one of the most popular tax-saving instruments in India, offering both tax deduction under Section 80C and tax-free interest accumulation. However, since PPF accounts can only be opened and maintained by resident Indians, NRIs are not eligible to claim deductions on contributions made to these accounts. Similarly, deductions under Section 80GG, which allow taxpayers to claim benefits for rent paid if they do not receive House Rent Allowance (HRA), are generally restricted to resident individuals. This means that NRIs who are paying rent in India but do not receive HRA from an employer may not claim deductions under this section.
Other deductions and schemes, such as certain savings instruments and tax benefits tied to investments restricted to residents, are also unavailable to NRIs. Understanding the eligibility criteria is crucial to ensure that NRIs do not inadvertently claim deductions that they are not entitled to, as incorrect claims can lead to notices from the Income Tax Department, delays in processing, and potential penalties. Proper awareness of which deductions are available and which are restricted allows NRIs to optimize their tax planning while remaining fully compliant with Indian tax laws.
How TaxBuddy Can Assist NRIs in Claiming Deductions
Platforms like TaxBuddy can greatly simplify tax filing for NRIs. TaxBuddy helps identify eligible Chapter VI-A deductions, ensures compliance with Indian tax laws, and automates calculations. NRIs can upload their financial details, and the platform suggests all applicable deductions while checking for errors. Expert-assisted plans allow guidance for complex cases like NPS contributions or education loans, ensuring that all deductions are claimed accurately and refunds are maximized.
Conclusion
Claiming the correct Chapter VI-A deductions is essential for NRIs to optimize their tax liability in India. Understanding which deductions apply, keeping accurate records, and filing timely returns can significantly reduce tax burden. Platforms like TaxBuddy streamline this process, offering automated guidance and expert assistance for hassle-free filing. For anyone looking for support in claiming deductions and filing taxes as an NRI, it is highly recommended to download theTaxBuddy mobile app for a secure, efficient, and simplified experience.
FAQs
Q1: Can NRIs claim Section 80C deductions? Yes, Non-Resident Indians (NRIs) can claim deductions under Section 80C on certain specified investments made in India. Eligible investments include life insurance premiums, contributions to National Savings Certificates (NSC), Equity Linked Savings Schemes (ELSS), and five-year fixed deposits with banks in India. These deductions reduce taxable income, helping NRIs save on tax liabilities while staying compliant with Indian tax laws. It is important to note that only investments made in India and specified under Section 80C are eligible.
Q2: Is PPF eligible for NRIs under Section 80C? No, NRIs are not allowed to contribute to Public Provident Fund (PPF) accounts once they become non-resident. Consequently, deductions for PPF contributions under Section 80C are not available to NRIs. Any attempt to claim this deduction could lead to scrutiny or disallowance by the Income Tax Department. TaxBuddy automatically excludes PPF from eligible deductions for NRIs to ensure accurate filing.
Q3: Can NRIs claim Section 80D for family health insurance? Yes, NRIs can claim deductions under Section 80D for premiums paid towards health insurance policies for themselves, their spouse, and dependent children. The deduction is subject to specified limits—₹25,000 for individuals below 60 years and ₹50,000 for senior citizens. TaxBuddy helps calculate the maximum allowable deduction based on premiums paid, ensuring that NRIs fully benefit from this provision.
Q4: Are education loan interest deductions under Section 80E available to NRIs? Yes, NRIs can claim deductions under Section 80E for interest paid on education loans taken for higher education. This applies to loans taken for themselves, their spouse, or children. The deduction is available for the entire interest amount paid during the year, but principal repayment is not eligible. TaxBuddy tracks eligible interest payments and incorporates them into the ITR calculation to maximize tax benefits.
Q5: Can NRIs claim donations under Section 80G? Yes, donations made by NRIs to eligible charitable institutions in India are deductible under Section 80G. The deduction can range from 50% to 100% of the donation amount, depending on the charity. TaxBuddy identifies eligible institutions, calculates deductions, and ensures proper documentation is maintained for verification by tax authorities.
Q6: What is the limit for Section 80TTA for NRIs? NRIs can claim a deduction of up to ₹10,000 per financial year on interest earned from savings bank accounts in India under Section 80TTA. This deduction is only applicable to interest from savings accounts and not fixed deposits. TaxBuddy automatically incorporates these limits when computing the total deductions for NRIs, ensuring compliance with the Income Tax Act.
Q7: Can NRIs claim Section 80GG rent deductions? No, NRIs are not eligible to claim deductions under Section 80GG for rent paid, as this provision applies only to resident individuals who do not receive House Rent Allowance (HRA). TaxBuddy ensures that this inapplicable deduction is excluded from the calculation for NRIs to prevent errors or disputes.
Q8: How does TaxBuddy help NRIs claim deductions? TaxBuddy simplifies the filing process for NRIs by identifying eligible deductions automatically, calculating maximum benefits, and integrating them into the ITR. The platform provides step-by-step guidance, checks for errors, and ensures compliance with Indian tax laws, reducing the risk of disallowance and optimizing tax savings.
Q9: Are all Chapter VI-A deductions available to NRIs? No, while many deductions under Chapter VI-A are available, some, like PPF contributions and resident-specific allowances, are restricted to resident individuals. TaxBuddy automatically applies the correct set of deductions for NRIs, ensuring that only applicable benefits are claimed without violating tax regulations.
Q10: Can NRIs file ITR online using TaxBuddy? Yes, NRIs can file their ITR online through TaxBuddy. The platform supports both self-filing and expert-assisted plans, guiding users through TDS verification, eligible deductions, and accurate reporting. TaxBuddy also helps with e-verification of the filed return, streamlining the filing process from start to finish.
Q11: How can NRIs maximize deductions using TaxBuddy? NRIs can maximize deductions by entering all eligible investments and expenses accurately into TaxBuddy. The platform calculates deductions across Sections 80C, 80D, 80E, 80G, and 80TTA, ensuring that the maximum allowable benefit is claimed. TaxBuddy also flags potential optimization opportunities, helping NRIs plan their finances efficiently while complying with tax laws.
Q12: Is expert assistance recommended for NRIs filing ITR? Yes, expert-assisted plans are highly recommended for NRIs, especially in complex cases involving foreign income, multiple investments, or transfer pricing considerations. TaxBuddy’s professionals ensure compliance with Indian tax laws, verify all deductions and credits, and help avoid errors that could lead to penalties or delayed refunds. This guidance ensures a smooth, accurate, and optimized filing experience.
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