#Budget2021: 100% Increase In Tax Relief Under Section 80C? 47% Indians Want More Tax Relief
In the country’s first paperless Union Budget to be conducted on February 1, 2021, Finance Minister Nirmala Sitharaman is expected to increase the current Income Tax exemption limit under Section 80C of the Income Tax Act from Rs 1.5 lakh to about Rs 3 lakh.
Furthermore, experts are hoping for a clear distinction to be adopted from the Government’s side, on long-term and short-term savings.
Individual taxpayers too are looking forward to receiving some relief on personal tax, in the upcoming Budget.
Tax Exemption Under 80C Could Increase to Rs 3 Lakh p.a.
Experts are anticipating an increase in the Income Tax deduction limit under Section 80C of the ITA to upto Rs 3 lakh, in the upcoming Budget.
As of now, tax exemption of upto Rs 1.5 lakh can be claimed for investments made in various instruments like PPF, five-year bank FDs, Provident Funds and Life Insurance premium paid, among others, under Section 80C.
Ankit Sehra from Ankit Sehra & Associates says that an increase in the exemption limit from Rs 1.5 lakh to 3 lakh p.a., shall attract more investment, thereby boosting the overall development of the country.
Yes Securities is expecting a hike in Section 80C limit to Rs 2.5 lakh, in the Budget 2021.
Clear Distinction b/w Long-Term and Short-Term Savings
Currently, there is no major support in the tax policy to encourage long term savings, which Sehra believes is the need of the hour.
He hopes that the Government will adopt a clear distinction between Long term and Short-term savings, this time.
“Life insurance and Pension funds are a major source of savings for long term purposes. This time we can expect that the Government would consider the separate exemption limit for both of them apart from section 80C”.
Expectations of Relief in Personal Tax
A survey conducted by FICCI and Dhruva Advisors, of individual taxpayers show that:
- About 40% participants want ‘personal tax relief’, as the key theme of direct tax proposals in the upcoming Budget.
- About 47% respondents want the Government to widen the tax slabs, in respect of direct taxes.
Thus, with respect to individual taxpayers, they are expecting the Government to provide a personal tax relief in the upcoming Budget.