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
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 gives taxpayers the benefit of deduction 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 (HUF).
This benefit is not applicable for companies, partnership firms and other businesses.
Deduction is available on these investments
Equity Linked Savings Scheme (ELSS): This scheme with a lock-in period of 3 years not only provides an opportunity for tax saving but also helps in wealth creation.
Public Provident Fund (PPF): The 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, which is based on a fixed interest rate.
Unit Linked Insurance Plans (ULIPs): Investment in this scheme provides long-term financial security with a tax deduction of up to ₹1.5 lakh.
Life Insurance Premium: Tax exemption is available on premiums paid on life insurance policies.
Basic amount paid on home loan: Tax exemption is available on the principal of home loan.
Senior Citizen Savings Scheme (SCSS): Provides a stable income after retirement.
Sukanya Samriddhi Yojana: Secure and tax free scheme for the future of girl child.
80C limit
In 2014, a limit of ₹1.5 lakh was fixed, which is less according to 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.
Eligibility for investment and deduction
Only Indian and non-resident Indians (NRIs) individual taxpayers and HUFs are eligible for this benefit.
To avail the deduction, it is necessary to invest or spend during the financial year (April 1 to March 31).
How to claim deduction in section 80C?
Taxpayers have to provide necessary documents such as payment receipt and investment certificate while filing income tax return (ITR). Once the return is filed and approved, the taxable income reduces due to the deduction, thereby reducing the tax liability.
