People have high expectations from the budget. Apart from giving a growth booster to the economy, there is a possibility of big relief for the taxpayers in the budget. For many years, no such announcement has been made for the taxpayers, from which they have got direct benefit. In such a situation, the government can please them by giving them the gift of tax exemption. The Indian Banks Association (IBA) has demanded that the 3-year fixed deposit should be brought under the tax exemption limit. If this exemption is given by the government, then it will definitely be a big relief. Let us know what other steps the government can take to please the taxpayers.
Demand to make 3 year FD tax free
The Indian Banks Association (IBA) has demanded from the Finance Minister that the lock-in period of tax free fixed deposits should be reduced. In the current system, tax exemption is available on FD of 5 years, but, a demand has been placed to reduce it to 3 years. The association says that by bringing 3-year FDs under tax exemption, taxpayers will get a good option along with other products. Due to low interest rates, people are investing more in other products like PPF or Sukanya instead of FD. Because, their interest is better. Mutual funds also appear to be a better option for investors. The lock-in period of 5 years on Fixed Deposits reduces its attractiveness for tax exemption. Therefore, 3 years FD should be included in the tax saver.
The scope of 80C may increase
Tax exemption is available on investment up to Rs 1.5 lakh made under section 80C for income tax exemption. In this, there are many products like PPF, Sukanya Samriddhi Yojana, Life Insurance. In the year 2014, the scope of 80C was increased from Rs 1 lakh to Rs 1.5 lakh. Especially for the salaried class, section 80C is the best option to save tax. More people will invest in this than the increase in the exemption limit under this section. There has been no change in its limit in the last 8 years. This time it is expected from the budget that there will be some relief in it.
Chances of increasing the basic limit of tax exemption
According to tax experts Sunil Garg, the basic tax exemption limit is Rs 2.5 lakh. In the year 2014, it was increased from 2 lakhs to 2.5 lakhs. But, there has been no change in this in the last 8 years. In order to provide relief to the taxpayers, the basic income tax limit should be increased to Rs 3 lakh. The government will look at this from many aspects.