There are many steps announced by Finance Minister Arun Jaitely to lower the burden on individual taxpayers. Such as benefits of Section 80C, raising the basic exemption limit and additional deduction on interest paid on home loans. These will help the people save up to Rs 36,050 a year in the 30% tax slab. The people in the 30% tax slab the benefit wil be up to Rs. 25,750 and for those people in the 10% tax slab the benefit will be Rs 15,450.
Section 80C deductions get bigger
The cap on investments of Income Tax Act under Section 80C has been raised from Rs 1 lakh to Rs. 1.5 lakh. In the investing community this was one of the long pending demands. Under Section 80C deductions are eligible for contributions to Employee Provident Fund (EPF), life insurance policies, Public Provident Fund (PPF), National Saving Certificates (NSC), tax-saving mutual funds, tax-saving bank fixed deposits, home loan principal, and Senior Citizen Saving Schemes (SCSS) while calculating the taxable income.
Mr Vikas Vasal, PArtner, Tax, KPMG India says the higher deduction under section 80C will help the government achieve the twin objectives of encouraging household to go for long-term savings and increase the overall saving rate, which has fallen considerably over the last five years. Under Section 80CCD the limit for employee contribution towards the National Pension System (NPS) remain the same, at Rs 1 lakh.
Mr Deepak Jain, director and CEO, Tax manager.in, an e-filing portal said that the limit on employee contribution to the NPS has been kept at Rs 1 lakh even though the overall limit under Section 80C has been increased to Rs 1.5 lakh.
Individual have to allocate more money for tax-saving investments according to increase in the Section 80C limit. If an individuals budget allows him/her to allocate that extra sum in long-term-saving instruments then he/she have to make that assessment.
Also get a big relief to home loan borrowers due to this budget. Home loan interest for self occupied properties the deduction limit has raised from Rs. 1.5 lakh to RS 2 lakh. This is helpful for home borrowers as well as real estate sector, home borrowers can save money and it gives a boost to the real estate sector, which in the last couple of year have seen a slump demand.