Budget 2024: Why there is an urgent need to hike Section 80C deduction ceiling for income tax benefits
₹1.5 lakh to salaried individuals for investing in income tax saving instruments like the Public Provident Fund (PPF), five-year fixed deposit (FD), ELSS, National Savings Certificate, etc. Both individuals and HUFs are eligible for income tax deductions under Section 80C of the Income Tax Act. Experts believe that there is an urgent need to hike the 80C deduction ceiling.
Many working people heavily rely on Section 80C for income tax deductions. They're hopeful that in the upcoming Budget 2024, the limit for deductions (currently at 1.5 lakh) will increase. “Given the rising cost of living and the fact that the 80C limit hasn't changed for almost a decade, there's a strong desire for an adjustment," said Abhishek Soni, CEO and Co-founder of Tax2win.
According to Soni, people feel that the current 80C limit is easily used up by investments like PPF, PF, and home loan repayments, leaving little room for life insurance. They believe it's high time to create a separate category for life insurance in the tax system. This change would allow them to invest more in policies with better coverage, securing their future.
Raising the 80C deduction ceiling will let middle-class taxpayers save more. “However, benefits accrue disproportionately to higher earners. A balanced approach would retain limits for the well-off while adding separate buckets for small savers to build retirement and housing corpuses.
Tiered encouragement across income segments, not blanket hikes, deepen participation optimally," said Agam Gupta. Executive Director at Share India Fincap Pvt. Ltd.
You can claim a deduction for the investment made in the PPF account. You can invest a maximum of Rs. 1.5 lakh in a year.
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