News that Income Tax exemption would be up to Rs 3 lakh pleases all

Those who keep an eagle’s eye on the Budget are happy with the news that the Finance Minister Nirmala Sitharaman will raise the Income Tax deduction limit up to Rs 3 lakh in the upcoming Budget.

Currently, under Section 80C, a deduction up to Rs 1.5 lakh can be claimed for investments made in various instruments like PPF, five-year bank FDs, Provident Funds, Life Insurance premium paid etc.

“It is expected from upcoming budget 2021 that there should be an increase in the deduction limit of section 80C from Rs 1,50,000 to 3,00,000 p.a,” observes Roop Sircar, a business man. “This will boost more investment and eventually lead to the overall development of the country,” he added.

Sircar is of the hope that this time the Government would be adopting a clear distinction between long term and short-term savings. He said that currently there is no major support in the tax policy to encourage long term savings which is a need of this pandemic cycle.

 “Life insurance and Pension funds are a major source of savings for long-term purposes. This time we can expect that the Government would consider the separate exemption limit for both of them apart from Section 80C,” Sircar added.

”Govt has already unleashed a slew of measures to prop the supply side of the equation. On the demand side, it is imperative to augment disposable incomes of households, which will recalibrate the economic equilibrium. People are also expecting favourable policies to boost the real estate demand including an increase in the exemption for principal repayment on home loans. Yes Securities expect that exemption for principal repayment on home loans should match the HRA limits for salaried class.