Income Tax Exemption Limit May Get Doubled to Rs 2 Lacs

Tax cut

Currently the investments and expenditures up to a combined limit of Rs 1 lac get exemptions under Sections 80C, 80CC and 80 CCC of the Income-Tax Act.

To boost household savings, the Finance Ministry may double tax exemption limit under 80C to Rs 2 lacs.

Sources revealed that the revenue department is assessing the burden on the exchequer to hike the benefit limit.

The Budget for 2014-15 will be presented by Finance Minister Arun Jaitley in the Lok Sabha on July 10. The announcement is expected in the Budget.

Demands have come from bankers and insurers to increase the tax exemption limit from Rs 1 lac per annum for encouraging household savings.

The savings rate has come down from 38 % of GDP in 2008 to 30 % in 2012-13.

Sources said, increase in the exemption limit would provide relief to the salary earners who are muddled under the impact of high inflation.

The Direct Taxes Code (DTC) also has recommended the combined ceiling for investments and expenditures be upraised to Rs 1.5 lacs per annum.

The financial instruments which enjoy exemption include public provident fund, employees provident fund, life insurance premium, national savings certificates, equity linked saving schemes sold by mutual fund, bank FDs of five year maturity and repayment of capital on home loan.

Posted in: Budget 2014

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