Budget 2024 Income Tax: Need to increase section 80C limit; Here’s why india business news
A popular section under Section 80C is Income tax The Act is generally used by salaried income taxpayers to claim tax deductions for investments and expenses. Some common investments that can be claimed as deduction under Section 80C are:
- ppf
- pf
- ULIP
- ELSS
- life insurance premium
- Sukanya Samriddhi Yojana
- NSC
Why should the limit of Section 80C be increased?
Surabhi Marwah, tax partner, EY India, points out that the Rs 1,50,000 limit for deduction under Section 80C has remained the same for the last nine years (it was last revised in tax year 2014-15).
Surbhi told TOI, “Keeping in mind the inflation over the years and the fact that most of this limit is used in providing provident fund contributions and principal payment of housing loan, this limit should be reduced to a minimum. “It should be increased to Rs 250,000.”
Chander Talreja, partner, Vialto Partners, also says that with multiple options available for deduction under Section 80C, the current capping may eliminate the most common options among them such as employee’s PF contribution, LIC premium, PPF deposits, etc. According to Chander Talreja, the government may consider increasing the said limit by another Rs 50,000/-. “Some of the options that can be added to the existing list of expenses are fees paid for enhancing certification courses, executive programs, AI technology courses, etc.,” he told TOI.
Parizad Sirwala, National Leader, Global Mobility Services – Tax, KPMG in India advocates free cap for significant investments and expenses. Parizad explains that the investments/expenses eligible for a total deduction of Rs 1.5 lakh under Section 80C are a bundled basket.
“Therefore, the expectation has been to historically exclude certain important investments/expenses from Section 80C and provide a separate limit for the same rather than adding more options to the basket,” she tells TOI. “Repayment of housing loan deduction is one where a separate deduction can be considered and assessed almost as a separate deduction. Rs 1 lakh,” she elaborates, adding that from the overall deduction quantum perspective, the wish list every year is to double this limit to Rs 3 lakh.
Will Section 80C limit increase in Budget 2024?
Experts believe that there is not likely to be much change on the income tax front in the interim budget, hence there will be no change in it. Section 80C limit Not expected on February 1, 2024.
“This being an interim budget/vote-on-account, it is prudent not to expect major changes in the individual tax regime,” Parizad Sirwala told TOI.
Chander Talreja believes that while the government’s focus is on encouraging new individual tax regimes (as per the trend of the last few budgets), increasing the 80C limit will be a bit challenging, as currently, the said deduction is not allowed in the new In the personal tax system.