Big news for taxpayers! The government has just tabled the New Income Tax Bill in the Lok Sabha, and while the tax slabs remain unchanged, there’s a major shift you must know about. Section 80C, the lifeline of tax-saving deductions, is now moving under Clause 123 in the revamped tax structure.
What’s Changing?
Finance Minister Nirmala Sitharaman introduced the bill on February 13, sending ripples through the tax world. The bill, however, is still under discussion and will go through a select committee before it becomes law. Expect it to be enforced from April 1, 2026.
The good news? No changes in income-tax rates, slabs, or capital gains tax. The government aims to simplify tax compliance by making the language clearer and restructuring sections for better readability.
Section 80C Deductions Are Moving – Here’s What It Means for You
Every taxpayer is familiar with Section 80C deductions. Investments in ELSS, PPF, life insurance premiums, NPS, and tax-saver deposits all fall under this section. The cap remains the same at Rs 1.5 lakh per year. However, in the new bill, these deductions will be listed under Clause 123 instead of 80C.
Why This Shift Matters
The government has overhauled the tax structure, renumbering sections to remove outdated provisions and make tax laws easier to understand. Tax expert Mayank Mohanka, Founder-Director of TaxAaram.com, explains: “Clause 123 in the new Income Tax Bill directly corresponds to Section 80C in the current Income Tax Act, 1961. Schedule XV will list all eligible deductions.”
Simply put, everything you used to claim under 80C is still there, just under a new number. The rules, limits, and benefits remain unchanged.
Massive Restructuring – Here’s What’s Different
The current Income Tax Act (1961) has 298 sections across 823 pages. The new bill expands this to 536 sections within 622 pages. The increase is due to renumbering and clarity improvements.
Tax expert Ajay Rotti, Founder of Tax Compaas, breaks it down:“Previously, we had sections like 80, 80C, 80D, 80E, etc. The highest-numbered section was 298. But now, with restructuring, the total number of sections will exceed 500. However, the aim is simplification, not complication.”
What Should You Do Next?
Stay updated and prepare for changes before April 1, 2026. If you’re planning investments under Section 80C, rest assured that they will still help you save tax under Clause 123 in the new bill.
Final Thoughts
The government is making taxation easier to understand while ensuring deductions and exemptions stay intact. While these changes might seem technical, they’re actually designed to simplify the system for you.
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