Union Budget 2023-2024- Finance Minister Nirmala Sitharaman should hike the tax exemption limit under Section 80C of the Income Tax
Act, says Poorva Prakash, Partner at Deloitte India. In an interview with TOI, Poorva Prakash said that the increased cost of living calls for a hike in exemption limit under Section 80C.
According to Poorva Prakash, given the increased cost of living and inflation, the government should look to increase the Section 80C exemption limit to Rs 2.5 lakh.
“This will have a two-fold advantage. One, it would reduce the tax outflow and give more disposable income to the individuals,” she said. “Clearly, it is an important basket of deductions and individuals will be able to divert their funds into this good portfolio,” she added.
The last time the Section 80C limit was hiked was in 2014, when it was increased from Rs 1 lakh to Rs 1.5 lakh. Various industry chambers and associations have also called for an increase in Section 80C limit.
Assocham in its pre-Budget 2023 memorandum has called for a hike in Section 80C limit to Rs 3 lakh. “The current limit needs to be revised with passage of time. A higher limit will promote savings and building of capital,” Assocham said in its pre-Budget 2023 memorandum.
FICCI is of the view that over the years, investments made in various avenues available under Section 80C of the Income Tax Act have helped the government to raise funds as well as the individuals to save tax. “With too many investment/expenditures clubbed into the existing overall limit of Rs 150,000, individuals sometimes are discouraged from making further investments,” it notes.
“The government may look at increasing the overall deduction limit to at least Rs 300,000 to boost further investment and increase tax savings for the individual,” it recommends in its pre-Budget 2023 memorandum.