In Mumbai on Wednesday RBI Governor Raghuram Rajan said that there is a need for increase in tax exemption limit under section 80C on financial investments by individuals. Currently Section 80C allows investments up to Rs.1.50 lakh.
Section 80C was introduced in place of section 88 w.e.f. 1-4-2006. Limit of One Lakh of Investment under section 80C was fixed in A.Y. 2006-07 and after keeping the limit same for 9 year i.e. up to A.Y. 2014-15 the Government increased the same by Rs. 50000/- to Rs. 1.50 Lakh from A.Y. 2015-16.
While Acknowledging the Rs 50,000 increase in the limit in the last budget to Rs 1.5 lakh a year, he said benefits of this instrument have been lost over time as the limit was anchored at Rs 1 lakh for a long time. Mr. Rajan Said that increase in limit will help in increase in National saving rate which has decreased to 30% from a high of over 36.9% in 2007-08.
Finance Minister Arun Jaitley, who increased the limit to Rs.1.50 lakh in his last budget, will be presenting the first full fiscal budget on February 28, 2015.
We hope Mr. Jaitley will increase the limit Under section 80C and also increase basic exemption Limit to provide relief to General Taxpayers.