CA Sandeep Kanoi
Finance ministry considering the proposal to increase deduction limit under section 80C of the Income Tax Act, 1961 to Lakh from existing limit of Rs. one Lakh. The Limit of deduction U/s. 80C of Rs. one lakh was fixed wef Financial Year 2005-06 by replacing the section 88 of Income Tax Act,1961. Since then Deduction limit remains un-changed while during the same period cost inflation index increased from 497 to 1024, which shows an increase of 106%. Read – Cost Inflation Index – Meaning and Index from 1981-82
It is learnt that there have been demands from bankers and insurers to hike the tax exemption limit under section 80C from existing Rs 1 lakh per annum to encourage household savings.
Any hike in the exemption limit under section 80C, sources said, would provide much needed relief to the salary earners and other taxpayers who are reeling under the impact of high inflation.
Also Read – 6 Expectations of Middle Class from Budget 2014