Budget 2025 : As the day of Budget 2025-26 is approaching, taxpayers and investors are expecting changes in income tax provisions. This time the main demand of taxpayers is to increase the deduction limit under Section 80C. Which has remained at Rs 1.5 lakh since 2014. Experts believe that increasing this limit will not only provide relief to taxpayers, but they will also be able to do more savings and financial planning.
What is Section 80C?
Section 80C is a provision of the Income Tax Act 1961, which allows taxpayers to avail deductions on certain investments and expenses. Under this, taxpayers get the benefit of annual deduction of up to ₹ 1.5 lakh, which reduces their taxable income.
This deduction is available only to individual taxpayers and Hindu Undivided Families (HUFs).
This benefit does not apply to companies, partnership firms and other businesses.
You get the benefit of deduction on these investments
Equity Linked Savings Scheme (ELSS): With a lock-in period of 3 years, this scheme not only offers tax saving opportunities but also helps in wealth creation.
Public Provident Fund (PPF): Interest and maturity amount on this investment with a lock-in period of 15 years is tax-free.
National Savings Certificate (NSC): A safe investment option based on a fixed interest rate.
Unit Linked Insurance Plans (ULIPs): Investment in this plan provides long-term financial security with a tax deduction of up to ₹1.5 lakh.
Life Insurance Premium : Premiums paid on life insurance policies are tax exempt.
Payment of basic amount on home loan: Tax exemption benefit is available on the principal amount of home loan.
Senior Citizen Savings Scheme (SCSS): Provides a stable income after retirement.
Sukanya Samriddhi Yojana: A safe and tax free scheme for the future of girl child.
80C limit
The limit was fixed at ₹1.5 lakh in 2014, which is low considering today’s rising inflation and the needs of taxpayers.
Experts say that this limit should be increased to ₹ 2.5 lakh or more.
This will encourage taxpayers to save more and reduce their financial burden.
Investments and eligibility for deductions
Only Indian and Non-Resident Indians (NRIs) individual taxpayers and HUFs are eligible for this benefit.
The investment or expenditure must be made during the financial year (April 1 to March 31) to avail the deduction.
How to claim deduction under Section 80C?
Taxpayers have to submit the required documents such as payment receipts and investment certificates while filing income tax returns (ITR). Once the return is filed and accepted, the taxable income is reduced due to deductions, thereby reducing the tax liability.
