Budget 2018: Why government may increase section 80C limit
In the upcoming budget, the government may announce certain measures that can increase your take-home pay which will allow you to save more.
Although there are several measures that the government may introduce, one way of doing this could be increasing the section 80C limit of the Income-tax Act, 1961.
Out of the various deductions available under the Act, section 80C is primarily an investment-led tax avenue that helps in reducing one’s tax liability. Further, it helps in increasing savings of individuals that can help them meet their financial goals. “We expect Budget 2018 to increase the Section 80C investment limit for tax saving from the current Rs 1.5 lakh to Rs 2 lakh,” says Sonu Iyer, tax partner and people advisory services leader, EY. ” The increase in the limit is warranted to account for inflation. These increases would entail loss of revenue for the exchequer but they were also needed to keep the limits in line with inflation, she explained.
In Budget 2018, section 80C could see an increase in its limit from the existing Rs 1.5 lakh a year to Rs 2 lakh or possibly even higher. However, the increase may be restricted to one or two specific tax-saving products within the section 80C basket. The exemption limit was last raised in the 2014-15 budget where it was increased from Rs 1 lakh a year to Rs 1.5 lakh.