Ahead of the announcement of Union budget 2023, scheduled for 11 am on Wednesday, salaried professionals are, as always, looking forward to income tax-related announcements in finance minister Nirmala Sitharaman's speech. Last year's budget had left taxpayers disappointed, as no new income tax-related announcement was made.
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This year, therefore, professionals are again waiting with bated breath for the finance minister's address, which assumes significance also because this is the last full budget of the Modi government, ahead of the April-May 2024 Lok Sabha polls. And, one of the major demands, as seen on social media, is over Section 80C of the Income Tax Act, with netizens calling for an increase in exemption limit under Section 80C.
{{/usCountry}}This year, therefore, professionals are again waiting with bated breath for the finance minister's address, which assumes significance also because this is the last full budget of the Modi government, ahead of the April-May 2024 Lok Sabha polls. And, one of the major demands, as seen on social media, is over Section 80C of the Income Tax Act, with netizens calling for an increase in exemption limit under Section 80C.
{{/usCountry}}Here's all you need to know about Section 80C of the Income Tax Act:
(1.) It came into effect on April 1, 2006, and is one of the most popular sections of the Income Tax Act. This is because it allows taxpayers to reduce their taxable income; this they can do by making tax-saving investments, or by incurring eligible expenses.
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(2.) A successor to the now-defunct Section 88, this section allows for a maximum deduction of up to ₹1.5 lakh per year from a citizen's total salary during a financial year. Up to 2014-15, the maximum limit was capped at ₹1 lakh.
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(3.) The deductions, however, are not applicable if you choose to pay tax under the new regime, which came into effect on April 1, 2020 (under the existing system, an individual can choose between the old and new regime).
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(4.) To save tax, the following investment options are available under Section 80C: National Pension System (8-10% rate of interest), Equity Linked Savings Scheme (12-15%), Public Provident Fund (7.1%), Senior Citizens Savings Scheme (7.4%), National Savings Certificate (6.8%), Unit Linked Insurance Plan (8-10%), Fixed Deposit (Up to 8.4%), and Sukanya Samriddhi Yojana (7.6%).
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(5.) Section 80C is further divided into various sections. Also, only individuals and Hindu Undivided Families (HUFs) can claim deductions under it.