India's interim budget for 2024-25 is set to be presented on February 1, 2024. One of the most anticipated tax breaks in the budget is an increase in the basic exemption limit. Another is an increase in the limit for Section 80C deductions. Section 80C is the first and most widely used deduction under the Income Tax Act. Taxpayers are hopeful that Finance Minister Nirmala Sitharaman will provide some relief under Section 80C, even though this is an interim budget. In the 2019 interim budget, the exemption limit was increased.
The new government that will be formed after the Lok Sabha elections in April-May 2024 will present a full budget in July. The expectation of an increase in the Section 80C limit is due to the rising cost of living. This includes the cost of insurance premiums, home purchases, and education for children. With rising costs, it is necessary to increase the Section 80C limit to get more tax relief.
However, experts believe that there is not much chance of the limit for deductions under Section 80C being increased in the budget. This is because the benefit of this section is available only under the old tax system. Those who follow the new tax system cannot avail the deductions available under Section 80C.
What are the benefits?
Under Section 80C, you can claim tax deductions by investing up to Rs. 1.5 lakh. This section is available to individual taxpayers and Hindu Undivided Families (HUFs). Section 80C includes life insurance premiums, ELSS, EPF contributions, VPF contributions, LIC annuity plan contributions, investments in NPS, post office small saving schemes, PPF, tax saver FDs, Sukanya Samriddhi Yojana, ULIP children's tuition fees, Nabard bonds, and repayment of the principal amount of a home loan. It is important to note that the total tax deduction under Section 80C, 80CCC, and 80CCD (1B) cannot exceed Rs. 1.5 lakh.