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  1. Budget 2016: Govt should raise Income Tax deduction limit under section 80C to Rs 2.5 lakhs

Budget 2016: Govt should raise Income Tax deduction limit under section 80C to Rs 2.5 lakhs

Budget 2016 should include steps to channelise household savings into the capital market, generating employment and limiting dependence on foreign capital.

By: | New Delhi | Updated: February 20, 2016 10:25 PM
Budget 2016: Section 80C of the Income Tax Act, which provides for deductions for eligible investment, should be reconstructed into a tool for inculcating financial planning, saving and investing behavior among the masses.

Budget 2016: Section 80C of the Income Tax Act, which provides for deductions for eligible investment, should be reconstructed into a tool for inculcating financial planning, saving and investing behavior among the masses.

Budget 2016 should include steps to channelise household savings into the capital market, generating employment and limiting dependence on foreign capital.

Section 80C of the Income Tax Act, which provides for deductions for eligible investment, should be reconstructed into a tool for inculcating financial planning, saving and investing behavior among the masses. As a first step, eligible investments under Section 80C can be segregated into following groups with the ceiling of Rs 1.5 lakhs raised to Rs 2.5 lakhs and equally divided among each.

1.       Protection – Life insurance plans

2.       Regular income assets – PF, Pension Plans and Small Savings Schemes

3.       Growth Assets – Mutual fund ELSS, ULIPs, NPS

Tax-Free Bonds should continue due to their huge popularity with investors. Additionally, issuance of Infrastructure bonds should be restarted to channelise savings into infrastructure.

The KYC process needs to be simplified. In an era of digitisation, it is not fair to incur a cost of approximately Rs 150 on paperwork, just to get KYC done. There can be single digital KYC that can be extended to all financial instruments.

The author is Group CEO & Director, Bajaj Capital.

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