Is Modi Govt planning to increase Section 80C Deduction Limit? Finance Ministry replies
Section 80C Deduction Limit: There is no proposal under consideration to increase the exemption limit under Section 80C of the Income Tax Act 1961, according to the Finance Ministry.
Currently, annual investments up to Rs 1.5 lakh into several tax-saving schemes, home loan principal and Life Insurance policies qualify for deduction under Section 80C. The tax-saving schemes eligible for deduction under Section 80C include PPF, EPF, NSC, NPS, SCSS, 5-year fixed deposit in banks and post office, ELSS mutual funds etc.
The demand to raise the Section 80C limit has been raised for several years by taxpayers and tax professionals. Even the ICAI in its Pre-Budget 2023 recommendations suggested the Government to increase the deduction allowed for Public Provident Fund (PPF) under Section 80C from Rs 1.5 lakh to Rs 3 lakh (read details here).
However, the Government has so far decided not to increase the Section 80C limit. Instead, a New Tax Regime with lower rates but without Section 80C deductions has been introduced.
“It has been the stated policy of the Government to simplify the Income-tax Act, 1961 by removing exemptions and incentives while at the same time reducing the rates of taxes. As such, there is no proposal to increase exemption under Section 80C of the Income Tax Act under consideration,” Pankaj Chaudhary, Union Minister of State in the Ministry of Finance, said in a written reply to a query in the Lok Sabha on July 31.
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The minister was responding to a query on “whether the Government has acknowledged the need to streamline small saving plans and simplify and increase exemptions under Section 80C of the Income
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