Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026 on February 1, 2026, and experts are hoping that the Central government will increase the tax deduction limit under Section 80C to Rs 3 lakh from the current Rs 1.5 lakh.

Why experts seek increase in deduction limit?

According to experts, most of the deductions claimed by taxpayers are under Section 80C, but the limit has not been increased since 2014, and have advised the government to increase the limit to Rs 3 lakh, keeping in view the increased cost of living in recent years.

Notably, tax deductions under Section 80C can only be availed under the old tax regime, hence a large section of taxpayers still opt for the old regime to claim the benefits.

Tax deductions under Section 80C covers nearly a dozen investment options, including PPF, mutual fund tax schemes, and life insurance policies. Additionally, taxpayers can claim a deduction for the tuition fees of up to two children, and the section also allows for claiming deduction on the principal amount of a home loan.

How Section 80C promotes middle class savings?

Experts believe that increasing deduction limit to at least Rs 3 lakh will provide a major relief to a significant number of taxpayers, especially middle-class households with home loans.

They point out that tax deductions under Section 80C has played a huge role in promoting savings and investment in middle-class families as PPF and mutual funds tax schemes– which are great long-term investment options offering good returns–become tax-deductible.

According to experts, increasing deduction limit under Section 80C could prevent the decline witnessed in family savings, as middle class families will be able to invest more.