Section 80-C of the Income Tax includes so many investment options that people remain confused. The biggest thing is that its Rs 1.5 lakh limit is very low and because of this people are not able to take full advantage of it. In such a situation, people are hoping that Finance Minister Nirmala Sitharaman will exclude some things from the 80-C in this budget and increase its exemption limit to at least Rs 3 lakh.
Earlier in 2014, the then Finance Minister Arun Jaitley increased it from Rs 1 lakh to Rs 1.5 lakh. Tax expert Balwant Jain says that the investment limit under Section 80-C has increased from 1 to 1.5 lakh in the last 18 years. Even if inflation is to be considered at 6 per cent, it should be at least Rs 3 lakh. Industry Chamber Ficci has also demanded to increase this limit to 3 lakh.
What is Section-80C: Under Section 80-C of Income Tax, investments up to Rs 1.5 lakh can be deducted from taxable income, ie income tax exemption can be obtained instead. If someone’s annual income is Rs 6 lakh and he has invested Rs 1.5 lakh in investment instruments under 80-C, then his taxable income will be considered as Rs 4.5 lakh.
What comes: Life Insurance Premium, Principal Amount of Home Loan, Equity Linked Saving Scheme (ELSS), Public Provident Fund (PPF), Employees Provident Fund, Stamp Duty, Registration Charge for Purchase of Property, Sukanya Samriddhi Scheme, National saving certificate, senior citizen saving scheme, pension (eg investment in NPS), ULIP, tax saving FD up to five years or investment in bonds, etc.
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Home loan should be separated: Tax expert Balwant Jain says that keeping the principal of the home loan in section 80-C itself has many problems. Its limit is already quite low. If this much alone becomes the basic money of the home loan, then people are unable to take any other benefit. Therefore, provision should be made in a separate section for tax rebate against the principal of home loan. For example, in the year 2019, a separate section of deduction 80EEA was brought for the people who are buying houses for the first time on home loan interest.
There are so many items in it that not everyone gets the benefit. Many items like children’s school fees, PF are essentially there. So this Mandatory expenditure of many people becomes 1.5 lakh rupees. Now if the repayment of home loan is also added to it, then it will be out of the limit, so people do not get much benefit from this section. Therefore, the principal payment of the home loan should be excluded from this exemption limit.
