FE Editorial : Don’t raise 80C limits
In FY12, the total premium collected by life insurance firms was only a bit higher than the total amount of gold imported (R2.9 lakh crore versus R2.7 lakh crore), suggesting that in the face of high inflation, investors still preferred to invest in gold, never mind the tax exemptions. Ditto for bank deposits where growth has slowed given interest rates offered are below inflation levels—SBI’s chief is on record saying he has lost R15,000 crore of deposits in the last few weeks as depositors have moved to products that include liquid mutual funds that don’t have any tax benefits. The other issue is of distorting investments to lock in investors into sub-optimal products. To use one example, HDFC’s Tax Saver Fund which qualifies for 80C
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