Investments are majorly covered under section 80C of the I-T Act which has the maximum limit of Rs.1.5 lakh. Currently, people who are in high tax brackets are facing this issue of not being able to use section 80C for deductions because of the limit of savings being very low. Their savings limit under section 80C gets exhausted very easily by various other instruments like PF and fixed deposits only.
To promote the equity mutual fund investments, the government should increase the limit of such sections. Moreover, it should also give some relief in tax slabs by increasing the initial limit by Rs.50000 at least. To make the best use of section 80C, the government should increase the limit to some extent. “An expectation is for an increase in deduction limit u/s 80C from Rs. 1.5 lakh to Rs. 2 lakh,” says Anil Chopra, Group CEO & Director, Bajaj Capital.
Moreover, not only in section 80C but to promote NPS for saving money for your retirement, the limit of NPS investment should also increase by an additional amount of Rs.50000, making it to Rs.1 lakh.
Adding to it, “to grow the Pension Sector, deduction limit u/s 80CCD(2) towards contribution to NPS may get enhanced from Rs. 50000 to Rs. 1 lac,” says Chopra.
The government should provide some relaxation in tax exemption under the NPS scheme. Currently, under NPS scheme maturity amount is levied for taxation under the income tax act.
“Removal of taxes on NPS maturity proceeds and allowing subscribers to invest up to 100% in the Equity Fund Option can help in promoting retirement savings among the masses,” says Naveen Kukreja, CEO& Co-founder, Paisabazaar.com.
Most of the people save tax under ELSS mutual fund which gives you tax saving plus capital appreciation benefit. This is one of the best instruments for saving tax but unfortunately, people are not able to make the best use of this scheme because its saving also falls under the same deductions only.
“An enhanced deduction or a separate section for ELSS investments will also increase retail investors’ participation in capital markets,” says Kukreja
Not only section 80C or 80CCD(1B) provides benefit but section 80EE also plays an important role for individuals who are buying a home for the first time. In order to promote the sale of property amongst the new buyers and keeping the current surge prices of house in view, the limit of section 80EE should also be increased by some amount. This step can give more opportunity to new buyers and help the government to give a boost in real estate sector.
“Among other expectations from Budget 2017, the government should increase the basic tax exemption limit and continue with Section 80EE to revive consumer demand and incentivise low-cost housing,” says Kukreja