New Income Tax Bill 2025: Section 80C is now clause 123 under the new bill 

Finance Minister Nirmala Sitharaman introduced the latest Income Tax Bill in parliament today. This bill is set to be enforced starting from April 1, 2026, and has been assigned to a Select Committee for review. The committee is expected to present its findings on the opening day of the subsequent parliamentary session.

While the bill suggests various amendments, the fundamental income tax rates and capital gains tax rates remain unaltered at present. The focus of the bill is primarily on simplifying the language used in tax regulations to enhance compliance ease.

How much tax do I have to pay? Calculate now

Section 80C

All taxpayers are well-acquainted with the ‘Section 80C’ deductions, a provision under the Income Tax Act of India that grants exemptions on specific expenses and investments from income tax. Section 80C allows for an annual deduction of up to Rs 1.5 lakh from an individual's total taxable income.

Only individual taxpayers and Hindu Undivided Families are eligible to benefit from 80C tax exemptions for investments. Corporate entities, partnership firms, and other businesses are not entitled to such exemptions.

Various investment options such as equity-linked saving schemes (ELSS), public provident fund (PPF), life insurance premiums, National Pension System (NPS) tax-saver deposits, and more fall under the purview of Section 80C. Multiple instruments qualify for deductions under 80C, with the maximum limit set at Rs 1.5 lakh. In the new bill, these deductions will be categorised under section 123.

The bill stated: “An individual or a Hindu undivided family, shall be allowed a deduction of the whole of the amount paid or deposited in the tax year, being the aggregate of the sums enumerated in Schedule XV, but not exceeding one lakh fifty thousand rupees (Rs 1.5 lakh), while computing the total income for that year, subject to the conditions specified in that Schedule.” 

The Income Tax Bill has removed over 300 outdated or omitted provisions from the current Income Tax Act, including Section 80CCA (deduction for investment in National Saving Scheme) and Section 80CCF (deduction for investment in long-term infrastructure bond).

Life insurance, PF contributions

Besides, the bill reorganised certain deductions related to taxes. Life insurance premiums, provident fund contributions, and deferred annuities will now be listed under Clause 123. 

Deductions for home loan interest will be divided between Clause 130 and Clause 131. Education loan interest deductions have been moved to Clause 129. Contributions to pension schemes are now under Clause 124, and deductions for the Agnipath Scheme are covered in Clause 125. Various other deductions previously found under Section 80C have been redistributed across specific clauses.

Other sections and clauses

The upcoming changes to the income tax bill will involve significant revisions to numbers, clauses, and sections across various topics currently addressed in the Income Tax Act of 1961.

For example, the new tax regime, presently listed under Section 115BAC in the existing Income Tax Act, will be relocated to Section 202 in the updated bill. Similarly, the filing of income tax returns (ITRs) under Section 139 of the current legislation will be shifted to Section 263 in the revised bill.

Furthermore, the sections concerning Tax Deduction at Source (TDS) in the current Income Tax Act (Sections 192 to 196) will be encompassed in Clause 393 of the new income tax bill. Similarly, the tax collection at source (TCS) sections in the Income Tax Act (Section 206C) will be incorporated into clause 394 of the updated bill.

In the new Income Tax Bill, charging provisions are detailed in Clause 15 (income from salary), Clause 20 (house property), Clause 26 (business or profession), Clause 67 (capital gains), and Clause 92 (other sources). Clubbing provisions are addressed in Clauses 96 to 100, while Clauses 108 to 121 cover the set-off and carry forward of losses.

Tax filing deadlines

The latest income tax bill adheres to the timelines established by the Income Tax Act of 1961 for different entities to submit their income tax returns. Check out the deadlines for different taxpayers under the new income tax bill:

Individuals: due by 31st July
Companies: due by 31st October
Cases requiring audit: due by 31st October, with the option to file the ITR by 30th November
Transfer Pricing Cases: due by 30th November
Revised Return: due by 31st December (9 months from the end of the relevant tax year or before the completion of assessment, whichever is earlier)