Budget 2026: In the General Budget 2026, middle-class taxpayers want the government to increase the limit of Section 80C of the Income Tax Act from Rs 1.5 lakh to Rs 3 lakh.

Budget 2026: As Budget 2026 approaches, people's anxiety is growing. Middle-class taxpayers, in particular, have high expectations. One of these expectations relates to Section 80C of the Income Tax Act, which allows individuals to save tax by investing in various savings schemes such as PPF, ELSS, life insurance, and NSC.

Will the government provide relief to the people? 

According to reports, in this year's budget, Finance Minister Nirmala Sitharaman may increase the deduction limit under Section 80C of the Income Tax Act from Rs 1.5 lakh to Rs 3 lakh. If the deduction limit is indeed increased, it will be a boon for taxpayers under the old tax regime. Ahead of the budget, taxpayers are eager to know whether, given rising inflation and increasing household expenses, the government will address long-standing demands for tax-saving deductions. 

What is Section 80C, and why is it important?

Section 80C allows taxpayers opting for the old tax regime to claim a deduction on investments made in popular savings instruments such as Public Provident Fund (PPF), Equity-Linked Savings Schemes (ELSS), life insurance premium, National Savings Certificate (NSC) and certain post office savings schemes.

Currently, the maximum deduction under Section 80C is limited to ₹1.5 lakh per financial year. This was last changed in Budget 2014. This means that it's been 12 years and remains stuck at ₹1.5 lakh. While expenses related to education, healthcare, insurance, and retirement planning have risen rapidly during this period, the reduced deduction limit is preventing taxpayers from benefiting from this.

Will the government increase the 80C limit?

There has been a long-standing demand to increase the Section 80C deduction limit. The American Chambers of Commerce in India (AMCHAM), along with suggestions from industry bodies and tax experts, has formally urged the government to increase the Section 80C deduction limit to ₹3.5 lakh.

According to AMCHAM, this move will directly benefit salaried professionals and middle-income families, who rely heavily on tax-saving investments to manage their finances wisely. The increased deduction limit will reduce taxable income, resulting in more cash on hand and encouraging long-term savings.