Modi government can give good news to crores of taxpayers in its third term. The government can increase the limit of 80C from Rs 1.50 to Rs 3 lakh. Many taxpayers choose section 80C as their preferred tax saving option. Under Section 80C of the Income Tax Act 1961, if individuals opt for the old tax regime, they can avail a maximum deduction of Rs 1.5 lakh for the financial year 2024-25. Those who opt for the new tax regime are not eligible to avail this deduction.

The limit was increased in the year 2014

In 2014, the then Finance Minister Arun Jaitley increased the 80C benefit limit to Rs 1.5 lakh per annum. This change was one of the major forms of relief given by the government in its first budget. However, there has been no change in the 80C limit since then. This marks a decade since the last increase in 2014. Every year many taxpayers hope that the Finance Minister will increase the Section 80C limit in the Union Budget 2024. Many believe that the 80C limit has not increased in line with income and costs. Due to this difference, many taxpayers use the entire 80C limit to save tax.

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What is the benefit of Section 80C?

The maximum tax deduction allowed to taxpayers under Section 80C is Rs 1.5 lakh. However, taxpayers can invest in one or more savings schemes to save tax. Deductions under Section 80C are available only to individuals and Hindu Undivided Families (HUFs). Taxpayers can claim deductions for investments in savings schemes or for payments of investments and expenses falling under the 80C category.

Why should the Section 80C limit be increased?

A person’s taxable income is calculated by deducting the 80C deduction from his total income. Any change in the Section 80C deduction limit directly affects a person’s taxable income. Taxpayers will get the direct benefit of this. The cost of many people has increased. Salaries have increased, but the benefits of Section 80C have not kept pace. Due to this, many people take full advantage of 80C. That is why increasing the limit in Section 80C is always the first priority for taxpayers before the budget every year.

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Currently, investments up to Rs 1.5 lakh per annum in various tax saving schemes, home loans and life insurance policies are eligible for deduction under Section 80C. Savings schemes eligible for deduction under section 80C include PPF, EPF, NSC, NPS, SCSS, FDs for five years in banks and post offices, ELSS and mutual funds etc.

Taxpayers have been demanding to increase the section 80C limit for many years. Even many groups had demanded to increase it to 3 lakhs, in which ICAI, in its pre-budget 2023 recommendations, had demanded the government to increase the limit under section 80C from Rs 1.5 lakh to Rs 3 lakh.

Will the government increase the limit

The Central Government has so far decided not to increase the limit under section 80C. This information has been given in the statement issued by the Ministry of Finance. At the same time, a new tax regime has been introduced without Section 80C deduction with lower rates by not increasing the limit. State Finance Minister Pankaj Chowdhary said in the Lok Sabha on July 31 that it has been the declared policy of the government to simplify the Income Tax Act, 1961 by reducing the rates of taxes. In such a situation, there is no proposal to increase the exemption under Section 80C of the Income Tax Act under consideration.

Increased interest of these schemes

Minister of State for Finance Pankaj Chowdhary said that in the second quarter (July to September) of the financial year 2023-24, the rate of interest on National Savings Fixed Deposit Scheme (1 year and 2 years) and National Savings Recurring Deposit will be increased by 10 bps and 30 bps respectively. has been increased. Chaudhary also said that the net collection under small savings for the first quarter of the financial year 2023-24 was Rs 74,937 crore.

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Currently, investments up to Rs 1.5 lakh per annum in various tax saving schemes, home loans and life insurance policies are eligible for deduction under Section 80C. Savings schemes eligible for deduction under section 80C include PPF, EPF, NSC, NPS, SCSS, FDs for five years in banks and post offices, ELSS and mutual funds etc.

Taxpayers have been demanding to increase the section 80C limit for many years. Even many groups had demanded to increase it to 3 lakhs, in which ICAI, in its pre-budget 2023 recommendations, had demanded the government to increase the limit under section 80C from Rs 1.5 lakh to Rs 3 lakh.

Will the government increase the limit

The Central Government has so far decided not to increase the limit under section 80C. This information has been given in the statement issued by the Ministry of Finance. At the same time, a new tax regime has been introduced without Section 80C deduction with lower rates by not increasing the limit. State Finance Minister Pankaj Chowdhary said in the Lok Sabha on July 31 that it has been the declared policy of the government to simplify the Income Tax Act, 1961 by reducing the rates of taxes. In such a situation, there is no proposal to increase the exemption under Section 80C of the Income Tax Act under consideration.

Increased interest of these schemes

Minister of State for Finance Pankaj Chowdhary said that in the second quarter (July to September) of the financial year 2023-24, the rate of interest on National Savings Fixed Deposit Scheme (1 year and 2 years) and National Savings Recurring Deposit will be increased by 10 bps and 30 bps respectively. has been increased. Chaudhary also said that the net collection under small savings for the first quarter of the financial year 2023-24 was Rs 74,937 crore.

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Currently, investments up to Rs 1.5 lakh per annum in various tax saving schemes, home loans and life insurance policies are eligible for deduction under Section 80C. Savings schemes eligible for deduction under section 80C include PPF, EPF, NSC, NPS, SCSS, FDs for five years in banks and post offices, ELSS and mutual funds etc.

Taxpayers have been demanding to increase the section 80C limit for many years. Even many groups had demanded to increase it to 3 lakhs, in which ICAI, in its pre-budget 2023 recommendations, had demanded the government to increase the limit under section 80C from Rs 1.5 lakh to Rs 3 lakh.

Will the government increase the limit

The Central Government has so far decided not to increase the limit under section 80C. This information has been given in the statement issued by the Ministry of Finance. At the same time, a new tax regime has been introduced without Section 80C deduction with lower rates by not increasing the limit. State Finance Minister Pankaj Chowdhary said in the Lok Sabha on July 31 that it has been the declared policy of the government to simplify the Income Tax Act, 1961 by reducing the rates of taxes. In such a situation, there is no proposal to increase the exemption under Section 80C of the Income Tax Act under consideration.

Increased interest of these schemes

Minister of State for Finance Pankaj Chowdhary said that in the second quarter (July to September) of the financial year 2023-24, the rate of interest on National Savings Fixed Deposit Scheme (1 year and 2 years) and National Savings Recurring Deposit will be increased by 10 bps and 30 bps respectively. has been increased. Chaudhary also said that the net collection under small savings for the first quarter of the financial year 2023-24 was Rs 74,937 crore.

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There has been no increase in it for the last several years. The last time the 80C limit was increased was in 2014-15. Finance Minister Nirmala Sitharaman made no mention of it while presenting the budget on Wednesday.

Will the limit of section 80C increase or not? There was a lot of discussion about it before the budget. However, Finance Minister Nirmala Sitharaman did not mention anything about this section of the Income Tax Act.

In the news of increase in the tax exemption limit under the new income tax regime, no one paid any attention to this aspect. The Finance Minister did not say anything about this, so it has a meaning. Those who will remain in the old income tax regime in the financial year 2023-24 can claim deduction under this. The maximum deduction that can be claimed under this section of income tax is Rs 1.5 lakh.

When was the limit increased last time?

The Section 80C limit was last increased in the financial year 2014-15. It was then increased by Rs 50,000. This was increased from Rs 1 lakh to Rs 1.5 lakh. It helps in tax saving. The amount invested can be claimed under this section under the old income tax regime. Some people are not able to claim deduction under 80C.

For such people, the government had started a new system with lower tax rates. It was announced in the financial year 2020-21. From April 1, 2020, people had the option to opt for the old tax regime and claim deductions and exemptions. Otherwise, opt for the new regime with a lower tax rate. However, the benefit of deduction and exemption cannot be taken in the new income tax regime.

Benefits available on certain investment products

To claim deduction under section 80C, one needs to spend or invest in certain instruments. They are mentioned in the Income Tax Act. Employees’ Provident Fund (EPF), Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), Sukanya Samriddhi Yojana, National Savings Certificate, etc. are among the products that get the benefit of deduction under 80C. Similarly, this deduction is also available on the expenditure on children’s tuition fees, life insurance policy as well as repayment of home loan principal.

Different types of investment products also have different features under 80C. Their returns, liquidity and tax on returns are different. It is important to look at these features before investing.

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