Budget 2025: As Budget 2025-26 approaches, 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 is built since 2014 at ₹1.5 lakh. Experts believe that increasing this limit will not only provide relief to taxpayers, but they will also be able to do more saving 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 Family (HUF).
This benefit is not applicable to companies, partnership firms and other businesses.
Benefit of deduction is available on these investments
Equity Linked Savings Scheme (ELSS): This scheme with a lock-in period of 3 years not only offers tax saving opportunity 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 based on a fixed interest rate.
Unit Linked Insurance Plans (ULIPs): This scheme provides long-term financial security with tax deduction up to ₹1.5 lakh on investments.
life insurance premium: Tax exemption is available on premiums paid on life insurance policies.
Payment of basic amount on home loan: The benefit of tax exemption on the principal amount of home loan is available.
Senior Citizens Savings Scheme (SCSS): Provides a plan for stable income after retirement.
Sukanya Samriddhi Yojana: Secure and tax free scheme for the future of the girl child.
80C limit
The limit of ₹1.5 lakh was fixed in 2014, which is less than today’s rising inflation and 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 Indians 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?
While filing Income Tax Return (ITR), the taxpayer has to provide necessary documents like payment receipt and investment certificate. Once the return is filed and accepted, deductions reduce taxable income, thereby reducing tax liability.
Budget 2025: Will the government abolish the old tax regime? Will be announced in the budget!