Budget 2025: Will the Section 80C Limit Be Raised to ₹2.50 Lakh?

Budget 2025-26: Budget time is approaching, and taxpayers and investors are expecting some changes in the income tax rules. This time the biggest demand of taxpayers is that the deduction limit of Section 80C should be increased, which has been stuck at ₹1.5 lakh since 2014. Experts believe that if this limit is increased, then taxpayers will not only get relief but they will be able to improve their savings and financial planning.

Budget 2025

What is Section 80C?

Section 80C is a provision of Income Tax Act 1961 which gives taxpayers the benefit of deduction on certain investments and expenses.

• Current Limit: Annual deduction of up to ₹1.5 lakh is available, which reduces taxable income.

• Eligibility: This is available only to individual taxpayers and Hindu Undivided Families (HUFs).

• Excluded Entities: This benefit is not available to companies, partnership firms and other businesses.

Deduction on investments under Section 80C is available:

1. Equity Linked Savings Scheme (ELSS):
o 3 year lock-in period.
o Opportunity for wealth creation along with tax saving.

2. Public Provident Fund (PPF):
o 15 year lock-in period.

o Interest and maturity amount both tax-free.

3. National Savings Certificate (NSC):

o A secure investment option based on fixed interest rate.

4. Unit Linked Insurance Plans (ULIPs):

o Long-term financial security with tax deduction up to ₹1.5 lakh.

5. Life Insurance Premium:

o Tax exemption available on premium of life insurance policies.

6. Home Loan Principal Amount:

o Tax exemption is also available on the principal amount of home loan.

7. Senior Citizen Savings Scheme (SCSS):

o Option for stable income after retirement.

8. Sukanya Samriddhi Yojana:

o Secure and tax-free scheme for daughter’s future.

Why should the limit of Section 80C be increased?

In 2014, the limit was fixed at ₹1.5 lakh. But this limit is too less considering today’s rising inflation and the needs of taxpayers.

• Experts suggest:

o This limit should be increased to ₹2.5 lakh or more.

o This will encourage taxpayers to save more and reduce their financial burden.

How to claim investment and deduction?

1. Eligibility:

o Only Indian and Non-Resident Indian (NRI) individual taxpayers and HUFs are eligible for this benefit.

o Investment or expenditure should be during the financial year (April 1 – March 31).
2. Documents Required:

It is mandatory to submit payment receipt and investment certificate at the time of filing Income Tax Return (ITR).

3. Process:

As soon as ITR is approved, taxable income gets deducted, which reduces tax liability.

Expectation of increasing limit of Section 80C to ₹2.5 lakh in Budget 2025: Taxpayers and financial experts both are expecting this change. This is not just a way of saving tax, but can become a better platform for financial planning and savings.

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