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Section 80C Limit: The Finance Minister of State answered whether the government is raising the deduction under section 80C.

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Section 80C Limit: A deduction up to Rs 1.5 lakh is claimed by the Income Tax Department under Section 80C. This exemption is given under many investment schemes. 

Currently, investments up to Rs 1.5 lakh per annum in various tax saving schemes, home loans and life insurance policies are eligible for deduction under Section 80C. 

Savings schemes eligible for deduction under section 80C include PPF, EPF, NSC, NPS, SCSS, FDs for five years in banks and post offices, ELSS and mutual funds etc.

For many years, taxpayers have asked for the Section 80C cap to be raised. Even more, groups asked for it to be raised to 3 lakhs. In its pre-budget recommendations 2023, the ICAI asked the government to raise the cap under Section 80C from Rs 1.5 lakh to Rs 3 lakh.

Will the government increase the limit?

The Central Government has decided not to increase the limit under section 80C. This information has been given in the statement issued by the Ministry of Finance. 

At the same time, a new tax regime has been introduced without Section 80C deduction with lower rates by not increasing the limit. State Finance Minister Pankaj Chowdhary said in the Lok Sabha on July 31 that it has been the government’s declared policy to simplify the Income Tax Act of 1961 by reducing the rates of taxes. 

In such a situation, there is no proposal to increase the exemption under Section 80C of the Income Tax Act under consideration.

Increased interest in these schemes

 Finance Minister of State, Pankaj Chowdhary, said that in the second quarter (July to September) of the financial year 2023-24, the rate of interest on the National Savings Fixed Deposit Scheme (1 year and two years) and National Savings Recurring Deposit will be increased by ten bps and 30 bps respectively. 

PChaudhary also said that the net collection under small savings for the first quarter of the financial year 2023-24 was Rs 74,937 crore.

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