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 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. The exemption under 80C is available to taxpayers who file returns under the old tax regime. Under the current system, a maximum exemption of Rs 1.5 lakh can be claimed 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)
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.
80C deduction limit
According to experts, this time in the budget the government may increase the limit of 80C. The amount of insurance premium covered under Section 80C can be increased. The government can increase its limit from Rs 25,000 to Rs 50,000. At the same time, for senior citizens this limit can increase from Rs 50,000 to Rs 75,000.
Apart from this, experts believe that by increasing the benefits of Section 80D of the new tax regime, the government will give a great boost to the reach of the healthcare service sector.
80C limit was increased 10 years ago
Let us tell you that the government had last increased the limit of Section 80C in the year 2014. Till the financial year 2013-14, the limit under this section was only Rs 1 lakh. However, in the 2014 budget it was increased to Rs 1.5 lakh. The limit of this section was last increased 10 years ago. At the same time, taxpayers and employees expect the government to increase this limit every year.
TDS processing should be made easier
According to experts, currently, 1% TDS is deducted on purchasing property worth more than ₹50 lakh. Whereas this process is quite straightforward for resident sellers. At the same time, it is very difficult for Non-Resident Indian (NRI) sellers.
Capital gains tax should be made easier
Apart from this, at this time investors have to face many challenges regarding capital gains tax. There are many problems in this, from tax rate to residency status and holding period.
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.
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 returns (ITR). Attaching certificates of investment and payment facilitates claim processing.
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