New Income Tax Bill 2025: Section 80C Tax Deductions Relocated to Clause 123 - Details Inside

The Income Tax Bill 2025 has now permanently relegated Clause 123 in Chapter VIII, meant to deduce and condense the very provisions on 80C tax-saving deductions. Detail of the above was found recently in the bill tabled by India's Finance Minister before Parliament on February 13th, 2025. This reform was termed as something beneficial for or facilitating more awareness about the options available for tax savings to empower more informed financial decisions.

What are the major changes in the new Income Tax Bill?

The newly introduced Income Tax Bill, 2025, now provides great space for several changes, which includes relocating the Section 80C tax-saving deductions to Clause 123 under Chapter VIII, and the aim is a dawn of a new era-simplicity and clarity in the present tax regime, which is effective from April 1, 2026.

What is Section 80C and how does it play a vital role?

According to Section 80C of the Income Tax Act, the person or individual and Hindu Undivided Families (HUF) can have deductions in specified investments and expenses from income to the maximum limit of ₹1.5 lakhs per year for an individual or member of an HUF, which would add up to a reduction in taxable income leading to reduced tax liability.

What are the major deductions possible under Section 80C?

Deductions would mainly be available under Section 80C for premiums paid on life insurance, contribution made to the National Pension System (NPS), investment made in Equity-Linked Saving Schemes (ELSS), Public Provident Fund (PPF), and some fixed deposits. These provisions are set to encourage taxpayers for long time savings and investments.

How does the new bill bring about changes for these deductions?

Under the new income tax bill, Clause 123 of Chapter VIII shall include Section 80C deductions. They aren't getting erased from the scene, however, as reorganized for the new scheme under unique headings as would concern a specific financial activity-for example, provident fund contributions and life insurance would be included directly under Clause 123.

What major changes do you envisage in the new bill?

Other than this, the new income tax bill nullifies more than 300 obsolete provisions from the prevailing Income Tax Act, many of which had been sparingly used. It would also streamline sections relating to deductions, exemptions, rebates, and capital gains into much simpler terms.

How will taxpayers brace themselves for these upcoming changes?

Taxpayers will have to keep abreast with the new rules while trying to comprehend how it will play into tax planning. With the changes, judicious planning would be gotten on maximizing benefits out of tax-saving opportunities.