Section 80C Deduction Limit: Taxpayers have been expecting for a long time that the exemption limit available under 80C would increase. Currently, tax exemption of Rs 1.50 lakh is available under 80C.
However, recently a response has come from the government regarding increasing the limit of 80C. According to the Finance Ministry, no proposal is being considered to increase the exemption limit under Section 80C of the Income Tax Act, 1961.
Right now there are many tax saving schemes through which money can be saved under 80C. You can get exemption under 80C on annual investment up to Rs 1.5 lakh in home loan and life insurance policies. To get exemption under section 80C, investments can be made in PPF, EPF, NSC, ELSS mutual funds, NPS, SCSS, FDs for a period of 5 years in banks and post offices.
Taxpayers and tax professionals have been demanding for many years to increase the limit under Section 80C. Even ICAI, in its pre- Budget 2023 recommendations, had suggested the government to increase the deduction for Public Provident Fund (PPF) under Section 80C from Rs 1.5 lakh to Rs 3 lakh. However, the government has so far decided not to increase the section 80C limit. Instead a new tax regime has been introduced without Section 80C deduction with lower tax.
In a written reply to a question in the Lok Sabha on July 31, Pankaj Chowdhary, Union Minister of State in the Ministry of Finance, said that it has been the declared policy of the government to simplify the Income Tax Act, 1961 by removing exemptions and incentives, as well as reducing tax rates. There is no proposal under consideration to increase the exemption under section 80C of the Income Tax Act. ,
The minister was replying to a question whether the government has acknowledged the need to balance small savings schemes with the changing economic environment and interest rates and simplify and enhance exemption under section 80C of the Income Tax Act . Choudhary also said that the collection under Small Savings for the first quarter of FY 2023-24 stood at Rs 74,937 crore.