CA Sandeep Kanoi
Raising the limit of deduction under section 80C
Under the existing provisions of section 80C of the Act, an individual or a Hindu undivided family, is allowed a deduction from income of an amount not exceeding one lakh rupees with respect to sums paid or deposited in the previous year, in certain specified instruments. The investments eligible for deduction, specified under sub-section (2) of section 80C, include life insurance premia, contributions to provident fund, schemes for deferred annuities etc. The assessee is free to invest in any one or more of the eligible instruments within the overall ceiling of Rs. 1 lakh.
The limit of above investments eligible for deduction under section 80C was fixed vide Finance Act, 2005. In order to encourage household savings, it is proposed to raise the limit of deduction allowed under section 80C from the existing Rs. 1 lakh to Rs.1 .5 lakh. In view of the same, consequential amendments are proposed in sections 80CCE and 80CCD of the Act.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years in other words the same will apply in relation to Financial Year 2014-15 and subsequent Financial Years.
Amendment of section 80C.
27. In section 80C of the Income-tax Act, in sub-section (1), for the words “one lakh rupees”, the Amendment of words “one hundred and fifty thousand rupees” shall be substituted with effect from the 1st day of section 80C. April, 2015.
Amendment of section 80CCD.
28. In section 80CCD of the Income-tax Act, in sub-section (1), with effect from the 1st day of April, 2015,––
(i)for the words, figures and letters “Where an assessee, being an individual employed by the Central Government or any other employer on or after the 1st day of January, 2004”, the words, figures and letters “Where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004 or, being an individual employed by any other employer” shall be substituted;
(ii) after sub-section (1), the following sub-section shall be inserted, namely:––
“(1A) The amount of deduction under sub-section (1) shall not exceed one hundred thousand rupees.”.
Amendment of section 80CCE.
29. In section 80CCE of the Income-tax Act, for the words “one lakh rupees”, the words “one hundred and fifty thousand rupees” shall be substituted with effect from the 1st day of April, 2015.