With a view to boosting household savings, finance minister Arun Jaitley on Thursday raised the tax exemption limit on investments in financial instruments to Rs 1.5 lakh from Rs 1 lakh, re-introduced the once popular Kisan Vikas Patra (KVP) and increased the public provident fund (PPF) investment ceiling from Rs 1 lakh to Rs 1.5 lakh.
He also proposed the introduction of a National Savings Certificate with insurance cover to provide additional benefits to the small saver.
“To address the concerns of decline in savings rate and improving returns for small savers, I propose to revitalise small savings,” Jaitley said while presenting the Union Budget.
The UPA government had discontinued the KVP in 2011 in 2011 following the Shyamala Gopinath Committee report. Besides the KVP and the NSC with insurance cover, Jaitley also proposed the setting up of special small savings instrument to cater to the requirements of educating and marriage of the girl child.
“Increasing the limits on section 80C from Rs 1 lakh to Rs 1.5 lakh will also provide a boost to financial savings,” Arundhati Bhattacharya, chairman, State Bank of India said.
“It is a good budget for individuals as it would leave them with more money which will also offset the inflation burden to a large extent. It will channelise savings while leading to lower tax burden,” Girish Vanvari, co-head, tax, KPMG told Hindustan Times.