Seeking
to boost household savings, the government on Thursday hiked the exemption
limit for investments by individuals in financial instruments to Rs 1.5
lakh. Presently the investments and expenditures up to a combined limit of
Rs 1 lakh get exemptions under Sections 80C, 80CC and 80CCC of the Income-Tax
Act.
The announcement to hike tax savings limit was made by
finance minister Arun Jaitley in his speech while presenting the Union Budget,
2014-15.
There have been demands from bankers and insurers 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 per cent of GDP
in 2008 to 30 per cent in 2012-13.
The hike in the exemption limit would provide much needed relief to the salary earners who are reeling under the impact of high inflation.
The Direct Taxes Code (DTC) too had recommended that the
combined ceiling for investments and expenditures be raised to Rs 1.5 lakh per
annum.
The financial instruments which enjoy exemption include life
insurance premium, public provident fund, employees provident fund, National
Savings Certificates, repayment of capital on home loan, equity linked saving
schemes sold by mutual funds and bank FDs of five year maturity.
Source:-The Economic Times
