Budget 2024: If Finance Minister Sitharaman raised the Section 80C limit, investors in Equity Linked Savings Scheme (ELSS) mutual funds would benefit, as it would offer them enhanced opportunities for tax savings and investment growth. Union Finance Minister Nirmala Sitharaman will present the Budget 2024 on July 23.
The call to raise the Section 80C deduction limit stems from the current ₹1.5 lakh limit, which was established in 2014 during Late Arun Jaitley's tenure as Finance Minister.
Archit Gupta, CEO of Clear, advocates revising the stagnant Section 80C limit, which has not kept pace with inflation since 2014. An adjustment would assist taxpayers in mitigating the impact of inflation and promote savings and investments in essential financial instruments like ELSS, tax saver FDs, and PPF. This move supports the broader objective of fostering financial resilience and prosperity across India.
Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited, stresses the government's immediate need to contemplate increasing the Section 80C limit in the upcoming budget. This overdue adjustment would offer crucial relief to the middle class, grappling with escalating costs and insufficient tax exemptions. A higher limit would alleviate tax burdens and encourage savings and investments vital for personal and national financial advancement. Moreover, it would redirect more capital into critical sectors such as insurance, PF, and ESOPs, thereby deepening financial markets and aligning with economic realities.
Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services, expresses, "Increasing the LTCG limit for deduction from ₹1 lakh to ₹3 lakh would provide significant relief. Additionally, the new tax imposed on debt mutual funds harms their development. Investors are calling for reversing this tax or, at the very least, restoring indexation benefit for debt mutual funds."
ELSS funds are among the top investment choices for salaried individuals and the self-employed. Depending on the investment amount, they offer significant tax savings under Section 80C of the Income Tax Act.
ELSS funds are the only mutual funds eligible for tax deductions under Section 80C of the Income Tax Act of 1961. Investors can claim deductions up to ₹1.5 lakh by investing in various tax-saving options.
A low lock-in period of just three years, shorter than other Section 80C investments.
Provides high earning potential by investing in equity markets.
ELSS funds are locked in for three years, rendering them ineligible for short-term capital gains. Consequently, only long-term capital gains can be realised. These gains, up to ₹1 lakh annually, are tax-free, with any amount above this limit subject to a 10% long-term capital gains tax
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.