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

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Category : Income Tax (26745)
Type : Articles (16232)
Tags : Budget (1951) Income Tax Deductions (428) Section 80C (145)

0 responses to “Budget 2014- Deduction U/s. 80C may increased to Rs. 2 Lakh”

  1. P ROY says:

    IT CAN BE ONLY USEFUL FOR TAX PAYERS IF THE INTEREST EARNED WOULD HAVE BEEN NON TAXABLE. OTHERWISE IT IS FOOLING TAX PAYERS. LOT OF DEMONSTRATIVE CALCULATIONS ARE AVAILABLE, PLEASE CHECK.

  2. Sanket says:

    We welcome the recommendation of increase in saving u/s 80 c, I would also like to contribute that if this limit can also be divided like tax percent slab as per income i.e. the one who is having income upto 5 lakh limit u/s 80 c to be 2 lakh, the one between 5 to 10 lacs limit of saving can go upto 3 lacs like wise for income above 10 lacs.

  3. P ROY says:

    MOST IMPORTANT TO NOT: THE INTEREST RATE FOR TAX SAVINGS FD IS ALWAYS ABOUT 1% LESS THAN STANDARD FDS AND THE INTEREST EARNED IN TAX SAVING FDS ARE ALSO TAXABLE. SO THIS INCREASE IS COSMATIC ONLY. GIVES VERY LITTLE ADVANTAGE TO TAX PAYERS.

    THE MOST NEGATIVE POINT OF THIS IS, LESS MONEY WILL BE AVAILABLE WITH PEOPLE AT HAND AND THIS WILL CERTAINLY DECREASE THE PURCHASE POWER OF END USERS. THIS IS A FOOLISH STEP BY WHICH BANK FUNDING OF BUSINESS GIVEN MORE POTENTIAL BUT MARKET IS RETREATED. I. E. END OF THE DAY BUSINESS DUMPED TO HELL. SOME PEOPLE MAKE MONEY BY TAKING BANK LOAN FOR BUSINESS BUT BANKS END UP WITH MORE BAD LOANS?

  4. P ROY says:

    MOST IMPORTANT TO NOT: THE INTEREST RATE FOR TAX SAVINGS FD IS ALWAYS ABOUT 1% LESS THAN STANDARD FDS AND THE INTEREST EARNED IN TAX SAVING FDS ARE ALSO TAXABLE. SO THIS INCREASE IS COSMATIC ONLY. GIVES VERY LITTLE ADVANTAGE TO TAX PAYERS.
    BUT THIS WILL PROVIDES BIG ADVANTAGE AND PROFIT TO BUSINESS HOUSES. THEY WILL GET MUCH MORE MONEY AVAILABLE FOR BANK LOAN.
    THE MOST NEGATIVE POINT OF THIS IS, LESS MONEY WILL BE AVAILABLE WITH PEOPLE AT HAND AND THIS WILL CERTAINLY DECREASE THE PURCHASE POWER OF END USERS THUS THIS IS A FOOLISH STEP BY WHICH BANK FUNDING OF BUSINESS GIVEN MORE POTENTIAL BUT MARKET IS RETREATED. I. E. END OF THE DAY BUSINESS DUMPED TO HELL. SOME PEOPLE MAKE MONEY BY TAKING BANK LOAN FOR BUSINESS BUT BANKS END UP WITH MORE BAD LOANS?

  5. S. Murale says:

    It is a welcome step by the Government if the 80C exemption is increased to Rs,2.00 lakks. This will improve the investment sentiment. Salaried employees would increase their voluntary contribution to their Provident Fund. Moreover, people may also improve their investment in Mutual Funds SIP. This improve the Stock Market and thereby economy also. The Government may also consider the bank deposits for 5 years qualified for Income Tax Exemption u/s 80C may be reduced to 3 years. This will benefit the public who were not having knowledge in the Mutual funds.

  6. Rajesh, Mumbai says:

    Yes, Mr.Sandeep. You are right.

  7. kunjbihari sharma says:

    As per estimated the rebate u/s80(c) increased up to 2 lakhs .Which is not fruit ful due to all subsidy will have to aboslish by govt. in near future so that it will not be assessed.My opinion is basic rebate will be 4 lacs and one lac in 80(c) which is quite enough for small taxpayer .

    kunjbihari sharma

  8. s sudarshana says:

    It is a welcome step, though belated one. The tax payers should be careful in choosing the instruments for investment to qualify for Section 80-C. Most of banks which floated ELSS funds (equity linked savings scheme)have given negative income in the past. It is time the people choose to be wise in selecting the correct instrument to save tax than go by the advise of advisors as advisors design their advise based on the ‘knowledge’ of the investor.

  9. CS Sunny Kakkar says:

    Some of people in our country are the best investor in respect of their earnings. But still they never invest the money more than Rs 1 lacks. because of small limit of Rs 1 lacks mention U/Sec 80C of Income tax Act 1961.The Limit of Savings should raised up to 2 lacks this year and should be Enhanced every year.

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