In its Pre-Budget wish list regarding Income Tax 80C, the Confederation of Indian Industries (CII) has suggested to the Finance Ministry that the consolidated deduction under 80C be raised from Rs. 1 lakh to Rs. 2.5 lakhs.
Most Central Government employees have savings schemes that are linked with General Provident Fund. Under this scheme, the employee not only gets interest for the money saved, but also enjoys the option to withdraw the money whenever required. The money is also entitled to exemption under Section 80C. It has to be mentioned here that new employees (appointed on or after 2004) do not have this option.
If the Income tax deduction is raised from Rs. 1 lakh to Rs. 2.5 lakh under Section 80C, then there are possibilities that savings will increase among the employees.
It has to be mentioned that CII has suggested that a separate section be created for Tuition fees (Children Education Allowance). Although the allowance given for the higher education of the children is exempted from income tax under Section 80C, the Rs. 1 lakh exemption is considered to be very low. Now a amount of one lakh is exempt form income tax for all long and short term saving schemes including General Provident Funds.
CII has also suggested that the Rs. 1.5 lakh exemption being granted for house loan interests should be raised to Rs. 5 lakhs under Income Tax Section 24 for self-occupied property.
Source: CGEN.in