With the increasing expectations of the small taxpayers from the new Government, coming up with the new Union Budget, 2014 and living up to their expectations would be a tough job for the Government. Â One such expectation by the individuals of India is the increase in the deduction limit under section 80C. Section 80C is one such deduction provided to individuals and Hindu Undivided Family(HUF) which encourages saving among the masses. Most of the individuals make investment to claim deduction U/S 80C. Section 80C of the Income Tax Act,1961 provides that in computing the total income of an assessee, being an individual or an HUF, a deduction of up to 1 lakh rupees for life insurance premia, contributions to any provident fund, tuition fees, fixed term deposit of not less than five years with the scheduled bank, subscription to any deposit scheme of a public sector company , etc, is allowd. Though Section 80C is a boon to the tax savers, lot of individuals are barely left with any surplus to invest in the schemes over and above rupees 1 lakh. Section 80CCE further limits the benefit of Section 80C since it includes deduction under section 80CCC(deduction in respect of contribution to certain pension funds) and 80CCD (deduction in respect of contribution to pension scheme of Central Government) within the limit of Rs 1 lakh. It states that the aggregate amount of deductions U/S 80C, 80CCC and 80CCD shall not, in any case, exceed Rs 1 lakh. There is a need to separate the deductions available on life insurance to buyers and the pension plans. Now the industry is seeking a separate deduction for retirement planning products. Such a change would encourage individuals to save more and invest in beneficial schemes. Further this couldbreathe life into the non-starter New Pension Scheme. Keeping in mind the increasing cost of living, there is a need for the Government to think rationally and bring some changes for the betterment of the small tax payers.
Enhanced Section 80C limit is the most expected change in the upcoming Budget, 2014
News & FAQs | By ALOK PATNIA | Last updated on Oct 5, 2017
With the increasing expectations of the small taxpayers from the new Government, coming up with the new Union Budget, 2014 and living up to their expectations would be a tough job for the Government. Â One such expectation by the individuals of India is the increase in the deduction limit under section 80C. Section 80C is one such deduction provided to individuals and Hindu Undivided Family(HUF) which encourages saving among the masses. Most of the individuals make investment to claim deduction U/S 80C. Section 80C of the Income Tax Act,1961 provides that in computing the total income of an assessee, being an individual or an HUF, a deduction of up to 1 lakh rupees for life insurance premia, contributions to any provident fund, tuition fees, fixed term deposit of not less than five years with the scheduled bank, subscription to any deposit scheme of a public sector company , etc, is allowd. Though Section 80C is a boon to the tax savers, lot of individuals are barely left with any surplus to invest in the schemes over and above rupees 1 lakh. Section 80CCE further limits the benefit of Section 80C since it includes deduction under section 80CCC(deduction in respect of contribution to certain pension funds) and 80CCD (deduction in respect of contribution to pension scheme of Central Government) within the limit of Rs 1 lakh. It states that the aggregate amount of deductions U/S 80C, 80CCC and 80CCD shall not, in any case, exceed Rs 1 lakh. There is a need to separate the deductions available on life insurance to buyers and the pension plans. Now the industry is seeking a separate deduction for retirement planning products. Such a change would encourage individuals to save more and invest in beneficial schemes. Further this couldbreathe life into the non-starter New Pension Scheme. Keeping in mind the increasing cost of living, there is a need for the Government to think rationally and bring some changes for the betterment of the small tax payers.