There was a lot of discussion about one thing before the budget. It was being discussed whether the limit of section 80C would be increased.
There has been no increase in it for the last several years. The last time the 80C limit was increased was in 2014-15. Finance Minister Nirmala Sitharaman made no mention of it while presenting the budget on Wednesday.
Will the limit of section 80C increase or not? There was a lot of discussion about it before the budget. However, Finance Minister Nirmala Sitharaman did not mention anything about this section of the Income Tax Act.
In the news of increase in the tax exemption limit under the new income tax regime, no one paid any attention to this aspect. The Finance Minister did not say anything about this, so it has a meaning. Those who will remain in the old income tax regime in the financial year 2023-24 can claim deduction under this. The maximum deduction that can be claimed under this section of income tax is Rs 1.5 lakh.
When was the limit increased last time?
The Section 80C limit was last increased in the financial year 2014-15. It was then increased by Rs 50,000. This was increased from Rs 1 lakh to Rs 1.5 lakh. It helps in tax saving. The amount invested can be claimed under this section under the old income tax regime. Some people are not able to claim deduction under 80C.
For such people, the government had started a new system with lower tax rates. It was announced in the financial year 2020-21. From April 1, 2020, people had the option to opt for the old tax regime and claim deductions and exemptions. Otherwise, opt for the new regime with a lower tax rate. However, the benefit of deduction and exemption cannot be taken in the new income tax regime.
Benefits available on certain investment products
To claim deduction under section 80C, one needs to spend or invest in certain instruments. They are mentioned in the Income Tax Act. Employees’ Provident Fund (EPF), Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), Sukanya Samriddhi Yojana, National Savings Certificate, etc. are among the products that get the benefit of deduction under 80C. Similarly, this deduction is also available on the expenditure on children’s tuition fees, life insurance policy as well as repayment of home loan principal.
Different types of investment products also have different features under 80C. Their returns, liquidity and tax on returns are different. It is important to look at these features before investing.
