New Delhi: The demand to increase the limit of tax deduction under section 80C for income tax payers has once again intensified. Every year before the budget, people expect the government to increase this limit, which has been stable at Rs 1.5 lakh for the last ten years.
For the financial year 2024-25, individuals opting for the old tax system can avail tax deduction of up to Rs 1.5 lakh under 80C. This option is not available in the new tax system. The limit of 80C was last increased in 2014 by the then Finance Minister Arun Jaitley.
Under 80C, you can claim tax deduction on different types of investments and expenses. This includes life insurance premium, PPF, ELSS mutual funds, tuition fees, payment of home loan principal, etc.
Why should the limit be increased?
However, with inflation and rising incomes over the past decade, the 80C limit is being considered inadequate. People argue that the Rs 1.5 lakh limit gets exhausted very quickly due to rising costs.
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Tax experts say that increasing the limit of 80C will help people increase their savings and save tax. This will also help in achieving financial goals like retirement planning, children’s education and buying a house.
Increasing the 80C limit will reduce the tax burden on people and give them a sense of financial security. This becomes even more important in this era of inflation after the pandemic.
What needs to be done to make a claim?
To claim deduction under 80C, you have to fill the details of investments and expenses in your Income Tax Return (ITR) form. Your total taxable income is calculated by deducting the deductions made by you. It
remains to be seen whether Finance Minister Nirmala Sitharaman pays heed to this demand of the common man and increases the limit of 80C in the upcoming budget or not.
