The Budget is likely to bring some cheer to the average taxpayer by increasing the basic exemption limit for all income levels and by further increase in Tax deduction Limit Under Section 80C of the Income Tax Act,1961.
Increase in basic exemption limit:- Sources familiar with the developments said the finance minister may increase the basic exemption limit for individuals from Rs 2,50,000 to Rs 3,00,000. There could be an increase in the exemption limits for senior citizens as well by the same amount.
In his last Budget FM has increased exemption limit for individual below the Age of Sixty Years or HUF or every AOP or BOI, whether incorporated or not, or artificial juridical person by Rs. 50,000/- to Rs. 2,50,000/- and for individual, being a resident in India, who is of the age of sixty years or more but less than eighty years to Rs. 3,00,000/- from Earlier Limit of Rs. 2,50,000/-.
Increase in deduction under section 80C:- Similarly, the 80C limit, which refers to tax breaks on certain financial products and investments to encourage savings, is also likely to raised from Rs 150,000 to Rs Rs 200,000 — a move being perceived as an incentive to save in long-term instruments like the Public Provident Fund, National Savings Certificates, Sukanya Samriddhi Account and others.
At present, many in the higher income brackets find the 80C limit is exhausted largely by the employee provident fund.
In addition, there are children’s school fees and principal payout on home loans that easily exhaust the limit. An increase in this limit would help to enhance tax benefits on some of these expenses.
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