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Budget 2025: Section 80C is one of the most widely used provisions for tax saving in India.
Budget 2025: In the upcoming budget, the government is likely to provide tax relief
Budget 2025 Expectations Income Tax: As the Union Budget 2025 approaches, expectations are high among taxpayers for reforms that could ease their financial burden and encourage greater compliance. One of the most anticipated changes is an increase in the deduction limit under Section 80C of the Income Tax Act, 1961. For over a decade, this limit has remained stagnant at Rs 1.5 lakh, despite rising incomes and inflation.
Filing an Income Tax Return (ITR) is a fundamental responsibility for individuals and businesses, allowing them to optimise their tax liability and benefit from government-provided financial incentives. Among the various provisions in the tax regime, Section 80C remains a cornerstone for taxpayers aiming to save on taxes while promoting investments in certain financial instruments and expenses.
What Is Section 80C Of Income Tax Act?
Section 80C is one of the most widely utilised provisions under the old tax regime, enabling individual taxpayers and Hindu Undivided Families (HUFs) to claim deductions on specified investments and expenses. The maximum deduction allowed is Rs 1.5 lakh per financial year.
Here’s a breakdown of investments and expenses eligible for claims under Section 80C:
Investments:
- Equity Linked Saving Schemes (ELSS) in mutual funds
- Public Provident Fund (PPF)
- National Savings Certificate (NSC)
- Employee Provident Fund (EPF) (voluntary contributions)
- Unit Linked Insurance Plans (ULIPs) with a minimum premium allocation of 60%
- Sukanya Samriddhi Yojana Account
- Senior Citizen Savings Scheme (SCSS)
- Five-year tax-saving fixed deposits with banks
Expenses:
- Tuition fees for up to two children
- Repayment of the principal amount on home loans
- Premiums paid for life insurance policies
- Contributions to pension schemes such as the National Pension System (NPS)
How To Claim Deductions Under Section 80C?
To claim these deductions, taxpayers must make the investments or incur the expenses during the financial year (April 1 to March 31). When filing the ITR, these amounts are reported under the relevant sections, and supporting documents, such as investment proofs and payment receipts, are crucial for smooth processing.
Once the ITR is filed and processed successfully, the deductions claimed under Section 80C reduce the taxable income, effectively lowering the tax payable.
Will Budget 2025 Increase the Section 80C Limit?
The Rs 1.5 lakh limit for Section 80C deductions has remained unchanged since 2014. Financial experts and taxpayers alike have been urging the government to revise this cap to reflect current economic realities, especially as inflation and living costs continue to rise.
Rajiv Gupta, President, PB Fintech, said, “Section 80C covers a maximum deduction limit of Rs 1,50,000, which includes investments such as PPF and home loan refunds, thereby making it possible for this limit to run out. Introducing a separate tax exemption category for term insurance will incentivise Indians to secure their families with adequate life coverage and reduce the protection gap.”
While there has been no official word yet from the government regarding an increase in the Section 80C limit in Budget 2025, it remains a focal point of public and industry demands. A revision in this limit would not only provide relief to taxpayers but also encourage greater investment in financial instruments that drive national savings and economic growth.
As the finance minister prepares to present the budget, taxpayers are hopeful for measures that balance fiscal responsibility with relief for individuals and families. For now, those looking to maximise their tax savings under Section 80C should ensure timely investments and accurate ITR filings to fully utilise the current benefits.
