Taxpayers have long awaited an increase in the exemption limit under Section 80C, which currently stands at Rs 1.50 lakh. However, the government has recently responded, stating that there is no proposal to raise the limit. Various tax-saving schemes continue to offer deductions under Section 80C, such as home loans, life insurance policies, PPF, EPF, NSC, ELSS mutual funds, NPS, SCSS, and FDs. Despite demands from taxpayers and professionals, the government has chosen to maintain the current limit, opting to introduce a new tax regime with lower taxes instead.
Long-awaited Increase in Section 80C Exemption Limit
In a written response to a question in the Lok Sabha on July 31, Pankaj Chowdhary, Union Minister of State in the Ministry of Finance, clarified that the government’s policy is to simplify the Income Tax Act, 1961, by removing exemptions and incentives, while reducing tax rates. The minister categorically stated that there is no consideration for increasing the exemption limit under Section 80C of the Income Tax Act.
Furthermore, the government aims to balance small savings schemes with changing economic conditions and interest rates while simplifying and enhancing exemptions under Section 80C, but no changes are being proposed at this time. Choudhary also shared that the collection under Small Savings for the first quarter of FY 2023-24 amounted to Rs 74,937 crore.