Tax exemption limit may go up to 2 Lakh: Budget expectations
Indians have a saving mentality and household incomes saved in banks and post offices give those institutions an opportunity to invest those amounts in other profit making instruments. Hence if the tax exemption limit is increased to 2 lakhs which is double compared to the existing limit, then it will give a boost to household savings.
Presently the investments and expenditures up to a combined limit of Rs 1 lakh get exemptions under Sections 80C, 80CC and 80 CCC of the Income-Tax Act. These include tax saving bonds, kisan vikas patra, post office savings schemes, life insurance premiums, pension plans, tax saving mutual funds, tax saving fixed deposits etc.
The revenue department is assessing the burden on the treasury when the benefit limit is increased.
The maiden budget of the new BJP led government for 2014-15 will be presented by the Finance Minister Arun Jaitley in the Lok Sabha on July 10.
For a long time the bankers and Insurance companies have been demanding to hike the tax exemption limit from Rs 1 lakh per annum to encourage household savings.
The savings rate has come down from over 38 % of GDP in 2008 to 30 % in 2012-13. This is primarily due to the inflation, the prices of the daily need items, food grains, petrol etc. have increased and hence salaried employees are unable to save properly. Plus since home loans give the benefit of tax exemption, people are stretching their budgets to buy expensive homes, but are only looking at the 1 lakh cap for other savings.
Source- The Financial Express
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This is one thing all demands from the current govt. Not only banks and financial institutes but also common man & working professionals waiting for budget 2014 and this is one of their budget expectation for 2014-15.
Wow, this is really a great news. I will be much happier if the Union budget increase the Tax exemption limit. I will good savings and more money in my hand.