Have you fully utilised the income tax benefit available under Section 80C of the Income Tax Act.?. If not, it may be a great time to sort out your investments and curb your income tax outgo. Many wealth planners emphasise on the importance of income tax benefits available under Section 80C, often considered one of the most popular avenues to save money among salaried assessees. Every year, from wealth planners to chartered accountants to economists and the common man, all eagerly await any tax proposals in the Budget speech. With only few days left before Finance Minister Nirmala Sitaraman presents the Union Budget for 2019-20 in Parliament, a thorough understanding of existing rules applicable to 80C deductions can help you plan your tax-saving investments in advance.
Here's all you need to know about income tax benefits available under Section 80C of the Income Tax Act:
How much income tax can one save under Section 80C of the Income Tax Act?
Currently, Section 80C provides for deduction of up to Rs 1.5 lakh in taxable personal income in a financial year under certain conditions.
Which investments are eligible for income tax benefits under Section 80C?
- Premium paid towards subscription or renewal of a life insurance policy
- Unit Linked Insurance Plans (ULIPs)
- Infrastructure bonds
- Tax-saving mutual funds or Equity Linked Saving Scheme (three-year maturity)
- Provident fund (Employees' Provident Fund/Public Provident Fund
- Payment of stamp duty on purchase of house property
- Payment of principal amount of a home loan
- National Savings Certificate (NSC).
- Tax-saving fixed deposit (five-year maturity)
- Small savings schemes such as Senior Citizen Savings Scheme and Sukanya Samriddhi
- Payment of tuition fees (paid to a university, college or school) for up to two children
Increase in Section 80C limit on cards?
The Finance Ministry is looking at raising the tax exemption limit for savings and investments made under the Section 80C of the Income Tax law, news agency Bloomberg reported quoting people familiar with the matter.
Many groups have demanded for a hike in the threshold of income tax deduction allowed under Section 80C, to boost the savings in the hands of the common man.
Industry body FICCI or Federation of Indian Chambers of Commerce & Industry has called for an increase in the existing limit on income tax deduction available under Section 80C of the Income Tax Act.
In a statement listing its pre-Budget recommendations for the Finance Minister, FICCI has suggested increasing the overall deduction limit under Section 80C to at least Rs 3 lakh to "boost further investment and increase tax savings" for individual taxpayers.