New Income Tax Bill: Section 80C that includes deductions like NPS, ELSS, ULIP is now Clause 123; check out details
Section 80C: Deductions like investment in equity-linked saving schemes (ELSS), public provident funds (PPF), life insurance premiums, National Pension System (NPS) tax-saver deposits, Unit Linked Insurance Plan (ULIP) and more are covered in this section.
The new Income Tax Bill (ITB) was presented in the parliament on February 13 by Finance Minister Nirmala Sitharaman. The I-T Bill 2025 is expected to be enforced from April 1, 2026. Before that, the bill has been assigned to a Select Committee for review. The new bill suggests various amendments, capital gains, a new tax regime, TDS, TCS, and others. The bill makes no changes to income tax slabs, or the capital gains tax structure, but implies and streamlines the wording to make compliance easier.
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Section 80C
Meanwhile, there is a change mentioned in the Section 80C. Section 80C of the Income-Tax Act, 1961 have been moved to a new Section 123. All deduction under section 123 of the new tax bill have been listed in Schedule XV.
What is mentioned in the I-T Bill?
The investments and expenditures eligible for deduction outlined in section 80C of the ITA are now proposed in Schedule XV of the ITB. This schedule also includes the deduction allowable under Section 80CCD.
Sections 80TTA and 80TTB
ITB merges the deduction allowable under Sections 80TTA and 80TTB into one provision.
What is Section 80C?
Taxpayers who file their income tax return (ITR) must be familiar with the Section 80C. Deductions like investment in equity-linked saving schemes (ELSS), public provident funds (PPF), life insurance premiums, National Pension System (NPS) tax-saver deposits, Unit Linked Insurance Plan (ULIP) and more are covered in this section.
Who is eligible to benefit from 80C?
Only individual taxpayers and Hindu Undivided Families (HUF) can take benefit from 80C tax exemptions for investments.
What is the maximum tax exemption under Section 80C?
Taxpayers can claim a maximum of up to Rs 1.5 lakh deductions under Section 80C.
Other changes in I-T Bill 2025
The concept of ‘tax year’ has been introduced replacing ‘previous year’ and ‘assessment year’.
The new bill is shorter
The present Income Tax Act contains 52 chapters and 1,647 pages. The revised bill has been made shorter with only 23 chapters, 536 sections, and 622 pages.
TDS (tax deducted at source)
Section 197 of the ITA permits an assessee (deductee) to apply to the AO for a nil or lower TDS certificate. The benefit of a nil or lower TDS certificate is restricted to specific payments prescribed under this section.
TCS (tax collected at source)
According to I-T Bill 2025, Section 206C(9) of the ITA allows a buyer, licensee, or lessee to apply to the assessing officer for a certificate permitting the collection of tax at a lower rate. The application can be made for some transactions. The ITB expands the scope of this provision, allowing buyers to apply for a lower TCS certificate for any transaction.