Budget 2025 : As the date of Union Budget 2025 is approaching, expectations are rising among taxpayers regarding many reforms. The most prominent demand among these is to increase the exemption limit under Section 80C.
Under the Income Tax Act 1961, it has remained at Rs 1.5 lakh for the last decade. While inflation and income are constantly increasing, the limit of 80C has not been increased for a long time.
What is Section 80C?
Section 80C of the Income Tax Act is used by most taxpayers. It allows individual taxpayers and Hindu Undivided Families (HUFs) to claim tax exemption on investments and expenses. Exemption under 80C is available to taxpayers who file returns under the old tax regime. In the current system, a maximum exemption of Rs 1.5 lakh can be availed in a financial year.
Investments – Options under 80C
- Equity Linked Savings Schemes (ELSS)
- Public Provident Fund (PPF)
- National Savings Certificate (NSC)
- Employee Provident Fund (EPF)
- Unit Linked Insurance Plans (ULIP)
- Sukanya Samriddhi Scheme
- Senior Citizen Savings Scheme (SCSS)
- Five Year Tax Saving Fixed Deposit
- Tuition fees for up to two children
- Home Loan Principal
- Life insurance premium
- Contribution to National Pension System (NPS)
How to claim discount?
To claim deductions under section 80C, taxpayers must make investments or expenditures within the financial year (April 1 to March 31). These amounts have to be reported in the relevant section while filing income tax returns (ITR). Attaching certificates of investment and payment eases claim processing.
What are the expectations from Budget 2025?
The limit of Section 80C has been stagnant at Rs 1.5 lakh since 2014. Taxpayers and financial experts say it should be increased in line with the current economic situation. Rajiv Gupta, President, PB Fintech, said that since Section 80C covers investments like PPF and home loans, the exemption limit gets exhausted quickly. If term insurance is put in a separate tax exemption category, it will encourage life insurance and provide better protection to Indian families.
What does this limit mean for taxpayers?
If this limit is increased in Budget 2025, it will not only provide relief to taxpayers but will also encourage more investments in financial savings schemes.
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