OPEN APP
Home >Budget >Budget Expectations >Budget 2021: Here's a strong reason to enhance limit u/s 80C to 2.50 lakh
The earlier limit of  ₹1 lakh under Section 80C was fixed way back in 2003. It has been almost 18 years when the original limit of  ₹1 lakh was fixed. It has only been increased by 50% in 2014 which works out to just less than 3% annually.. Photo: iStock
The earlier limit of 1 lakh under Section 80C was fixed way back in 2003. It has been almost 18 years when the original limit of 1 lakh was fixed. It has only been increased by 50% in 2014 which works out to just less than 3% annually.. Photo: iStock

Budget 2021: Here's a strong reason to enhance limit u/s 80C to 2.50 lakh

Experts ask to declutter the section by taking out certain investments or expenses in a different Section.

Tax experts expect reasonable changes in the most popular section to claim deductions against various investments and expenditures, Section 80C of the Income Tax Act in the Budget. Currently, taxpayers can claim exemption up to 1.5 lakh under this section for investments made in public provident fund (PPF), equity-linked savings scheme (ELSS), insurance premium, payment of home loan principal and children’s tuition fee among others.

Tax experts expect the Government to increase the Section 80C limit to 2.50 lakh in the Union Budget to be presented on February 1.

"Presently as per Section 80 CCE the deductions available under Section 80C, 80CCC and 80 CCD(1) put together are capped at 1.50 lakh per year. This limit of 1.50 lakh was revised from 1 lakh in 2014. The earlier limit of 1 lakh was fixed way back in 2003. It has been almost 18 years when the original limit of 1 lakh was fixed. It has only been increased by 50% in 2014 which works out to just less than 3% annually. This annual average increase is not even on par with average inflation during the same period. In my opinion this should be directly raised minimum to 2.50 lakh" says Balwant Jain, an investment and tax expert.

Yes Securities also see a hike in Section 80C exemption to 2.5 lakh. "Govt has already unleashed slew of measures to prop the supply side of the equation. On demand side, it is imperative to augment disposable incomes of households, which will recalibrate the economic equilibrium," it says.

Section 80C seems too cluttered at the moment and it doesn’t provide enough berth for incentivising savings. Experts ask to declutter the section by taking out certain investments or expenses in a different Section.

"It's noteworthy that education costs and housing loan repayment form a significant part of an individual's financial commitment. The current limit leaves a little room for savings, and therefore Budget 2021 should enhance this ceiling. It also demands a hike given a rise in inflation that's likely to remain at elevated levels. Also, section 80C requires decluttering and moving some instruments into other baskets can be prudent move," says Rahul Jain, Head- Edelweiss Wealth Management.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close
×
Edit Profile
My ReadsRedeem a Gift CardLogout