Under section 80C of the Income Tax Act, a new segment can be created in the products of tax savings.
On February 1, Finance Minister Nirmala Sitharaman Modi will present the budget of 2.0 government. All sectors have their own expectations regarding the budget. The central government can create a new segment in the products of tax savings under section 80C of the Income Tax Act in the budget. In the upcoming budget, it is expected that Finance Minister Nirmala Sitharaman may announce a separate segment within the National Savings Certificate within section 80C, in which investment up to Rs 50,000 in National Savings Certificate (NSC) will be exempted.
It is also expected that the exemption limit under Section 80C can be increased from Rs 1.5 lakh per annum to Rs 2.5 lakh per annum. Apart from this, income tax slab can be rationalized.
Currently, tax deduction is available on deposits up to Rs 1.5 lakh in NSC. However, all taxpayers cannot eliminate the limit of section 80C by investing only in NSC. Most taxpayers are salary earners. His contribution to the provident fund and life insurance policy is seen while claiming the benefit of section 80C.
NSC will become more attractive
If the government creates a separate segment for tax exemption on amounts up to Rs 50,000, then this can become an attractive option for NSC taxpayers. There are many reasons for this. First, the maturity period of NSC is 5 years. For tax savings, the option of 5 years duration in front of normal taxpayers is a five-year fixed deposit scheme, which banks and post offices provide. If there is a separate segment within section 80C in NSC, then taxpayers will put their savings in this scheme. Secondly, at present it is getting better rate of interest from FD of bank and post office. There is sovereign guarantee with NSC, it is not a benefit in bank FD.
Currently NSC is getting an interest rate of 7.9 per cent. Today if you deposit Rs 10,000 in this scheme, after maturity, you will get a return of Rs 14,625. A deposit of Rs 25,000 will yield a return of Rs 36,563 and a deposit of Rs 50,000 will fetch Rs 73,126.
What do the experts say?
Experts believe that by increasing the limit of section 80C and rationalizing the tax slab, more money will come in people’s hands. With this, people will be able to save more. Divya Baweja of Deloitte Haskins & Sells LLP said that raising the 80C limit and changes in tax slabs have been a long-standing demand. According to him, these two demands will help the government to fulfill its big goals like insurance for all and home. He said that today the limit of section 80C is 1.5 lakh rupees and these are for some years. According to him, this demand has been there for a few years and now the limit should be increased.