From 1 April 2026, the Income-tax Act, 2025 replaced the 1961 Act – and India’s most famous tax section went with it. The Rs. 1.5 lakh basket you have known for two decades as Section 80C now lives in Section 123, read with Schedule XV, of the new Act. The good news: this is a renumbering, not a rewrite. The limit, the eligible investments and the lock-ins are unchanged in substance. Here is the full FY 2026-27 list, what changed cosmetically, and how to actually use the basket well.
The complete Schedule XV basket – FY 2026-27
| Investment / payment | Return (current) | Lock-in |
|---|---|---|
| Employees’ Provident Fund (your 12%) | 8.25% (FY 2025-26, tax-free) | Till retirement (conditional withdrawals) |
| Public Provident Fund (PPF) | 7.1% | 15 years (partial from year 7) |
| Sukanya Samriddhi Yojana (girl child) | 8.2% | Till age 21 of the daughter |
| ELSS mutual funds | Market-linked | 3 years |
| National Savings Certificate (NSC) | 7.7% | 5 years |
| 5-year tax-saver bank/post office FD | ~6.5-7.5% | 5 years |
| Life insurance premium (self/spouse/children) | – | 2-5 years (policy rules) |
| Home loan principal repayment | – | 5-year holding of the property |
| Stamp duty and registration on a new house | – | One-time, in the year of payment |
| Children’s tuition fees (max 2 children) | – | – |
| NPS / pension fund contribution (80CCC/80CCD(1) limb) | Market-linked | Till age 60 |
The combined ceiling across all items remains Rs. 1.5 lakh. The extra Rs. 50,000 NPS deduction (old 80CCD(1B)) survives separately in the new Act, over and above this basket.
Using the basket well – a CA’s ordering
- Count what is automatic first: your EPF contribution and any home loan principal already eat into the Rs. 1.5 lakh. Many salaried people need far less fresh investment than they think – check your payslip and loan schedule (our EPF calculator and home loan calculator show the exact figures).
- If you have a daughter under 10: Sukanya Samriddhi at 8.2% tax-free is the strongest government-backed rate in the basket.
- For equity exposure with the shortest lock-in: ELSS at 3 years – but treat it as an equity investment, not a fixed return.
- For pure safety: PPF remains the EEE workhorse; NSC and tax-saver FDs suit those wanting fixed, taxable interest.
- Tuition fees: often forgotten – the tuition component of school fees for up to two children qualifies.
What actually changed under the 2025 Act
Drafting, mostly. The 1961 Act scattered the basket across Sections 80C, 80CCC and 80CCD(1) with dozens of clauses; the 2025 Act consolidates the list into Schedule XV with Section 123 as the operative provision, and replaces “previous year/assessment year” with a single “tax year”. Employers, payroll software and the e-filing portal display the new section numbers from FY 2026-27. Old proofs and declarations remain valid – just expect Form 16 and the ITR to cite Section 123.
Old regime or new – which wins for you?
Enter salary and deductions once – see both regimes side by side before you lock Rs. 1.5 lakh away.
Open Income Tax CalculatorFrequently Asked Questions
Is the Rs. 1.5 lakh limit increased under the new Act?
No. Section 123 retains the Rs. 1,50,000 ceiling. Any increase would come through a Finance Act amendment, not the recodification.
Do my existing PPF/ELSS/LIC investments still qualify?
Yes – Schedule XV substantially reproduces the old eligible list. Continuing investments qualify exactly as before.
Which return do the new section numbers apply from?
For income earned from 1 April 2026 (FY 2026-27, returns filed in 2027). The return you file during 2026 for FY 2025-26 still uses the 1961 Act numbering.
Can I claim Section 123 in the new tax regime?
No – like old 80C, it is available only if you opt for the old regime. The new regime trades these deductions for lower slab rates.