Relevance of Sec. 80C

Sec 80C investments no longer relevant under new tax regime; focus on investment benefits, not just tax savings.

Every financial year, typically in March, it used to be a ‘tick box’ for investments eligible under Sec. 80C of the Income Tax Act to be executed. Investments up to ₹1.5 lakh a financial year are still eligible for deduction under Sec. 80C. But, under the new tax regime (NTR), this deduction is not available. Only returns filed under old tax regime (OTR) fetch benefit.

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The default option now is the NTR where tax rates are lower. In the latest Budget, tax slabs were widened, making them more people friendly. Net-net, for self-employed professionals and salaried people, NTR is beneficial due to favourable rates and income slabs even sans 80C investments. Hence, OTR and Sec 80C investments are made redundant.

In FY26, the Budget proposals will take effect. This article is not the final word on taxation — consult chartered accountant. With attractive slabs, NTR will be beneficial for most people making 80C almost redundant.

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However, you need a new perspective. Investments are not only about 80C but what the investment stands for, what it brings to the table. For example, we buy insurance for car or two-wheelers not for 80C but for protection and to abide by rules.

Here we look at investments eligible under Sec 80 C.