As the nation eagerly awaits the presentation of the interim Union Budget on February 1, 2024, expectations run high, particularly regarding tax-related measures.
While it's anticipated that the interim budget might not introduce major changes, taxpayers have specific hopes, especially in areas like Section 80C and home loan tax benefits.
Increase in Section 80C Limit
The current Rs 1.5-lakh deduction under Section 80C remains the only major incentive for those opting for the old income tax regime.
With the effect of retail inflation, there's a widespread call for an upward revision of the Section 80C limit. Here are deductions available under 80(C)
Deductions Available Under 80 (c)
Under Section 80C of the Income Tax Act, taxpayers have various avenues for tax savings. Investment Avenues: NPS, ELSS, ULIP, PPF
National Pension System (NPS), Equity-Linked Savings Scheme (ELSS), Unit Linked Insurance Plan (ULIP), and Public Provident Fund (PPF) offer tax deductions up to Rs 1.5 lakh.
But under the new tax regime also, a deduction of Rs 1.5 lakh under Section 80CCE, with an additional Rs 50,000 is exclusively available to NPS (Tier I account) holders.
Insurance Deductions: Life Premiums and Sukanya Samriddhi
Deductions under Section 80C extend to life insurance premiums paid for policyholders, spouses, and children. Sukanya Samriddhi Account contributions, offering exclusive benefits for the girl child also qualify.
NSC, Senior Saving schemes and Fixed Deposits
National Savings Certificate (NSC) investments, five-year tax-saving Bank Fixed Deposits and 5 year Post Office Time Deposit Schemes also allow for deductions for up to Rs 1.5 lakh.
Employees Provident Fund (EPF) contributions also receive similar tax benefits, and senior citizens over 60 years can capitalise on the Senior Citizen Savings Scheme.
Expenses covered Under 80(C)
Section 80C also covers tuition fees for up to two children, registration charges, stamp duty for a home/property, and principal repayment of home loans.
Home Loan Tax Benefit
Homebuyers are also hopeful for changes in Section 24(b), which currently limits the deduction for interest on home loans to Rs 2 lakh.
Not just in the old tax regime, but in the new tax regime also if you have taken a home loan for a property and rented it out to generate some rental income, you can get deductions on municipality tax, a standard deduction of 30 per cent, and interest on home loans is also exempted under new tax regime.
The interest deduction is capped at the limit of the rent received from the property.
