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.
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 filing returns under the old tax regime. In the current system, a maximum exemption of up to Rs 1.5 lakh can be availed in a financial year.
Investments – Options under 80C
Equity Linked Saving Schemes (ELSS)
Public Provident Fund (PPF)
National Saving Certificate (NSC)
Employees Provident Fund (EPF)
Unit Linked Insurance Plans (ULIP)
Sukanya Samriddhi Yojana
Senior Citizen Savings Scheme (SCSS)
Five-year tax saving fixed deposit
Tuition fees of up to two children
Home loan principal
Life insurance premium
Contribution to National Pension System (NPS)
How to claim exemption?
To claim exemption under Section 80C, taxpayers must invest or spend within the financial year (April 1 to March 31). These amounts have to be reported in the relevant section while filing Income Tax Return (ITR). Attaching certificates of investment and payment facilitates claim processing.
What are the expectations from Budget 2025?
The limit of Section 80C has remained stagnant at Rs 1.5 lakh since 2014. Taxpayers and financial experts say that it should be increased in line with the current economic situation. Rajiv Gupta, President, PB Fintech, said that investments like PPF and home loans are included under Section 80C, due to which the exemption limit gets exhausted quickly. If term insurance is kept 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.
