InvestorQ : What will happen if the Finance Minister hikes the Section80C deduction limit in the upcoming Budget?
Anjali Desai made post

What will happen if the Finance Minister hikes the Section80C deduction limit in the upcoming Budget?

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Swapnil Sarang answered.
2 years ago
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If Finance Minister Arun Jaitley does hike the Section 80C deduction limit, then it will help citizens such as you and I save more money and pay relatively less tax. The current Section 80C deduction limit is Rs 1.50,000. This means by investing in Section 80C instruments, one can reduce his/her taxable income by maximum Rs. 1,50,000 per financial year.

Section 80C instruments are:

1. Five- year bank deposits; with a lock-in period of 5 years

2. Public Provident Fund (PPF); with a lock-in period of 15 years

3. National Savings Certificate; with a lock-in period of 5 years

4. National Pension Scheme; with a lock-in up to retirement

5. ELSS Funds; with a lock-in period of 3 years

If this limit is increased to Rs. 2,00,000 then one would be able to reduce his/her taxable income by Rs. 2,00,000, This means a direct saving of Rs. 50,000 per financial year.

So, let’s keep our fingers crossed and hope Finance Minister Arun Jaitley does listen to the common man’s expectations from the Interim Budget 2019-20.

Other than the investment instruments stated above, premiums paid towards a life insurance policy; the principal component of a housing loan repayment; expenses on children’s tuition fee and many more are included in Section 80C deductions.

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