As Union Budget 2026 approaches, taxpayers are once again pinning their hopes on Section 80C. Tax experts and salaried individuals are urging the government to increase the deduction limit from the current ₹1.5 lakh to at least ₹3 lakh. The key question remains—will Finance Minister Nirmala Sitharaman address this long-pending demand in the upcoming budget?

No Change in 80C Limit Since 2014

Section 80C is one of the most widely used provisions of the Income Tax Act, offering tax relief to millions of middle-class taxpayers. However, despite rising inflation and living costs, the deduction cap has remained unchanged since 2014. At present, taxpayers can claim a maximum deduction of ₹1.5 lakh per financial year.

Available Only Under the Old Tax Regime

Tax professionals point out that a significant number of taxpayers continue to opt for the old tax regime precisely because it allows deductions under Section 80C. The new tax regime does not offer this benefit. Increasing the 80C limit could help keep the old regime relevant and attractive.

Investments and Expenses Covered Under Section 80C

Section 80C includes nearly a dozen investment and expense options, such as:

• Public Provident Fund (PPF)

• Equity Linked Savings Schemes (ELSS)

• Life insurance premiums

• Tuition fees for up to two children

• Principal repayment of home loans

Notably, tuition fees qualify as a deduction even though they are an expense rather than an investment, making this provision especially useful for families.

Why Raising the Limit Matters

If the government increases the Section 80C limit to ₹3 lakh, it could provide substantial relief to salaried individuals, home loan borrowers, and middle-income households. Higher limits would encourage savings, promote long-term investments, and potentially help reverse the decline in household savings seen in recent years.

Bottom Line: Raising the Section 80C deduction limit is one of the most awaited expectations from Budget 2026. Whether the finance minister delivers on this front could significantly impact taxpayer sentiment and household savings behavior in the coming years.

Disclaimer: This article is for informational purposes only. Tax rules are subject to change. Please consult a certified tax advisor before making financial decisions.