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Tax exemption limit under 80C raised to Rs 1.5 lakh

10TH_IT_RETURNS_1993141f

Seeking to boost household savings, the government today hiked the exemption limit for investments by individuals in financial instruments to Rs 1.5 lakh.

10TH_IT_RETURNS_1993141fNew Delhi: Seeking to boost household savings, the government today hiked the exemption limit for investments by individuals in financial instruments to Rs 1.5 lakh.

Presently the investments and expenditures up to a combined limit of Rs 1 lakh get exemptions under Sections 80C, 80CC and 80CCC of the Income-Tax Act.

The announcement to hike tax savings limit was made by Finance Minister Arun Jaitley in his speech while presenting the Union Budget, 2014-15.

There have been demands from bankers and insurers to hike the tax exemption limit from Rs 1 lakh per annum to encourage household savings.

The savings rate has come down from over 38 per cent of GDP in 2008 to 30 per cent in 2012-13.

The hike in the exemption limit would provide much needed relief to the salary earners who are reeling under the impact of high inflation.

The Direct Taxes Code (DTC) too had recommended that the combined ceiling for investments and expenditures be raised to Rs 1.5 lakh per annum.

The financial instruments which enjoy exemption include life insurance premium, public provident fund, employees provident fund, National Savings Certificates, repayment of capital on home loan, equity linked saving schemes sold by mutual funds and bank FDs of five year maturity.

Tax exemption limit has been raised to Rs 2.5 lakh from Rs 2 lakh proposed by Finance Minister Arun Jaitley in the Budget for 2014-15.

INCOME TAX RATE IMPACT
             (Individual Tax Payers)     
1. Up to Rs 2,50,000 NIL (Savings)     Rs 5,000
Rs 2,50,001 to Rs 5,00,000 10 per cent Do
Rs 5,00,001 to Rs 10,00,000 20 per cent Do
Above Rs 10,00,000 30 per cent Do
2.           (For Senior Citizens – above 60 years)
Up to Rs 3,00,000 NIL (Savings) Rs 5,000
Rs 3,00,001 to Rs 5,00,000 10 per cent Do
Rs 5,00,001 to Rs 10,00,000 20 per cent Do
Above Rs 10,00,000 30 per cent Do

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