Many working people heavily rely on Section 80C for income tax deductions. They're hopeful that in the upcoming  Budget 2024, the limit for deductions (currently at 1.5 lakh) will increase. “Given the rising cost of living and the fact that the 80C limit hasn't changed for almost a decade, there's a strong desire for an adjustment," said Abhishek Soni, CEO and Co-founder of Tax2win.

Budget 2024: Why it's time to raise 80C deduction ceiling?

According to Soni, people feel that the current 80C limit is easily used up by investments like PPF, PF, and home loan repayments, leaving little room for life insurance. They believe it's high time to create a separate category for life insurance in the tax system. This change would allow them to invest more in policies with better coverage, securing their future.

Raising the 80C deduction ceiling will let middle-class taxpayers save more. “However, benefits accrue disproportionately to higher earners. A balanced approach would retain limits for the well-off while adding separate buckets for small savers to build retirement and housing corpuses. Tiered encouragement across income segments, not blanket hikes, deepen participation optimally," said Agam Gupta. Executive Director at Share India Fincap Pvt. Ltd.

 

Income tax deductions under Section 80C

This section includes the following investments and expenses:

Public Provident Fund (PPF)

You can claim a deduction for the investment made in the PPF account. You can invest a maximum of Rs. 1.5 lakh in a year. 

 

Tuition Fees

You can claim a tax deduction for the tuition fees

 

Five-year fixed deposit

Interest earned on fixed deposits with a tenure of not less than five years is eligible for tax deduction under section 80C. 

 

Premium on life insurance policy

As per the Income Tax Act, an individual can claim a deduction under section 80C for the premium paid for a life insurance policy 

 

ELSS Mutual Funds

ELSS funds are equity funds that allow you to save tax. Investments in these funds are eligible for tax deduction.

 

Repayment of principal on a housing loan

Individuals can claim a tax deduction on the principal amount paid for a home loan under Section 80C of the Income Tax Act.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.