Section 80C hike in Union Budget 2026: ₹2.5 Lakh or ₹3.5 Lakh? Here is what experts are saying

As Union Budget 2026 approaches, attention is turning to Section 80C of the Income‑tax Act, a key provision that allows taxpayers to reduce their taxable income by investing in certain instruments or spending on approved avenues.

Eligible investments include Public Provident Fund (PPF), Employees’ Provident Fund (EPF), Equity‑Linked Savings Schemes (ELSS), life insurance premiums, National Savings Certificates (NSC), Sukanya Samriddhi Yojana (SSY), and principal repayment on home loans, among others.

Together, these qualify for a deduction from taxable income up to a specified limit.

The demand for increasing the Section 80C deduction limit is not new.

“With the rising cost of living and the increasing financial burden on taxpayers, the Section 80C limit should be raised further, and it could be increased to ₹3.5 lakh to better align with the current economic conditions,” said Mumbai‑based tax and investment expert Jain.

Experts believe that raising the limit would not only provide immediate relief but also promote long‑term savings. "The Section 80C limit of ₹1.5 lakh has remained unchanged since 2014. Inflation has reduced the real value of Section 80C deductions over the years. Increasing the limit to ₹2.5 lakh would encourage long-term savings and provide relief to middle-income taxpayers,"said Abhishek Soni, CEO & Co-founder, Tax2win.

"Currently, overall deduction u/s 80C of ITA 1961 (Section 123 of ITA 2025) is ₹150,000/-. This is to be increased to ₹350,000," AMCHAM said in its Pre-Budget Memorandum 2026-27.

A revision in Section 80C could make a meaningful difference, helping taxpayers save more while encouraging disciplined, long-term investment.