The pandemic and its repeated outbreaks have hit the various sectors of the economy. Therefore, there are high expectations from the budget this year. Finance Minister Nirmala Sitharaman will present her fourth Budget today, on February 1, 2022.
There has been a stagnancy for 7 years with the 80C limit at Rs 1.5 lakh. Industry experts, therefore, say it is time to revise the same. For instance, if the 80C limit gets enhanced to Rs 2 lakh or Rs 2.5 lakh, it would be quite a respite to all, especially the salaried. This is because, with the rise in salaries, inflation and insurance premium, the Rs 1.5 lakh limit gets exhausted quickly. Hence, there is no incentive to enhance the coverage or invest in additional investment products.
Sanjib Jha, CEO and ED, Coverfox.com says, “The 4 aspects which affect taxation for a salaried individual are tax-slab, exemption limits, standard deductions and perquisite benefits. This year, the highest expectation of a salaried individual is to have higher tax exemption limits, especially the 80C.”
He further adds, “This is because an individual may already be spending more than 1.5 lakhs under these sections such as home loan, PPF, insurance, etc but can only claim a benefit upto Rs 1.5 lakhs per annum only. If this limit enhances to even Rs 2 lakhs, it would directly impact the tax payable amount”.
So, if a person is in the 20 per cent tax bracket and can save additional Rs 50,000 under 80C, then he/she would be able to save Rs 10,000 of tax every year!