Budget 2021: Tax limit under income tax section 80C is 2.5 lakh, has not changed since 2014

Experts and taxpayers have high hopes for the general budget to be presented during the Corona epidemic . Experts believe that the budget for the financial year 2021-22, which will be released on February 1, could bring relief to the taxpayers. Finance Minister Nirmala Sitharaman said the exemption limit under section 80C of income could be increased to Rs 2.5 lakh. At present, the exemption limit for investments under 80C is Rs 1.5 lakh.

The year 2014 has not changed

Tax expert Balwant Jain said the exemption limit under Section 80C of the Income Tax Act has not changed since 2014. Earlier in 2003, the tax exemption limit under this section was fixed at Rs one lakh. That is, almost 18 years have passed when the limit of Rs 1 lakh has been fixed. Then in 2014 there was an increase of 50% which was only 3% annually. In the meantime, the annual increase is not enough compared to inflation. The minimum tax exemption under 80C needs to be Rs 2.5 lakh.

Additional need to encourage savings

Rahul Jain, president, Edelweiss Wealth Management, said the current tax exemption on investments of Rs 1.5 lakh under 80C is not enough for taxpayers to save. The finance minister should propose raising the limit to encourage savings. Also another product needs to be included.

Relief on health care discounts

One taxpayer said the cost of health care has risen as inflation has risen. Health insurance has become a necessity after the Corona epidemic. There is a need to increase the exemption limit for health insurance expenses under section 80D to Rs 75,000 for the average person and Rs 1 lakh for senior citizens. In addition, the salaried class was given a deduction of Rs 50,000. The research tax should be Rs 1 lakh.

Exemption limits even on home loans

Experts say that in this budget, the government should increase the exemption limit on home loans to taxpayers. At present, there is a rebate of Rs 1.5 lakh under Section 80C on repayment of principal of a home loan. Thus, on interest payment, a benefit of Rs. 2 lakh is given under section 24B. This time in the budget, all the people should pay Rs 5 lakh tax under a separate clause. There will be no terms and conditions in the new section so that the home buyer can take advantage of this at his own expense.