Finance

Increase in 80C

Section 80C of the Income Tax Act in India is significant because it provides tax benefits to individuals by allowing them to claim deductions on various investments and expenditures. This section is important for several reasons:

1. Encourages Savings and Investments: By offering tax deductions on certain investments, Section 80C incentivizes individuals to save and invest. This is beneficial for both personal financial health and the overall economic growth of the country.
2. Promotes Long-Term Financial Planning: The investments eligible under Section 80C often include long-term financial products like life insurance premiums, Public Provident Fund (PPF), Equity-Linked Savings Schemes (ELSS), and National Pension System (NPS). These instruments help individuals plan for their future financial needs.
3. Reduces Tax Liability: By allowing deductions of up to ₹1.5 lakh, Section 80C helps reduce an individual’s taxable income, thereby lowering their overall tax liability. This provides a direct financial benefit to taxpayers.
4. Supports Financial Inclusion: The section includes a variety of investment options, catering to different financial goals and risk appetites. This helps ensure that a wide range of individuals, regardless of their financial situation, can benefit from tax savings.

Demands and Discussions:

1. Simplification of Tax Rules: There is often a demand for simplification in the tax rules and benefits to make it easier for taxpayers to understand and comply with them. Some argue that having numerous eligible investments under Section 80C adds complexity to the tax filing process.
2. Adjustment for Inflation: There are discussions about adjusting the ₹1.5 lakh limit for inflation. With increasing costs and changing financial needs, adjusting the limit could better reflect current economic conditions.
3. Redesign for Efficiency: Some policymakers and financial experts advocate for a redesign of the section to better align with modern financial products and goals. This might include expanding eligible investment options or refining the deduction limits.
4. Impact on Government Revenue: There is a balance to be struck between providing tax benefits and maintaining government revenue. Any proposed changes are usually scrutinized for their potential impact on fiscal health.

These discussions and demands reflect the evolving nature of financial planning and tax policy, and changes to Section 80C are often debated during budget preparations and policy reviews.

Interim Budget 2024 :

The Interim Budget 2024, a pivotal financial roadmap presented in the prelude to a general election, holds significant implications for the nation’s economic trajectory. Fiscal policies, a linchpin of governmental strategy, are anticipated to undergo scrutiny and potential reforms, potentially impacting taxation, public spending, and economic management. Also to know previous budget visit Budget 2023.

Amid expectations of tax concessions, the budget’s nuanced approach is eagerly awaited, especially for insights into sector-specific updates, offering a glimpse into allocations and policies governing industries such as agriculture, healthcare, and infrastructure. Investors keep a keen eye on announcements related to tax relief, potential investment opportunities, and alterations in the tax landscape.

The agricultural sector, a crucial component of the nation’s economy, may witness attention, particularly in the context of policies concerning agricultural credit. For specific demographics, like senior citizens and the middle-class taxpayer segment, the budget’s provisions for tax benefits and relief measures are closely watched.

The Finance Minister, as the architect of these financial decisions, plays a central role in shaping the fiscal contours of the country. As the budget unfolds, intricacies related to income tax deductions, standard deduction adjustments, and alterations in Section 80C will be pivotal facets that individuals and businesses alike will keenly observe, with the overarching goal of understanding the economic measures set to unfold in this critical financial plan.

Importance :

Interim Budget 2024, As we are well aware that the Union Elections are going to be held in this year and this would be last budget for existing government there are few important aspects that are expected.

The finance minister has already gave a key note that the new budget will not be having any major announcements but will focus on the government expenditure until the new government takes over.

Key Points :

Government might increase the subsidy for the affordable housing by more than 15 percent.

Provident Fund Office (EPFO). Anticipated announcements related to this matter are expected during the release of the interim Budget.

In the forthcoming interim Budget, there is a probability that the government will unveil a significant rise in the agricultural credit target for the next fiscal, aiming for a range of ₹22-25 lakh crore. This measure is intended to encompass every eligible farmer.

EY, in its 2024 Budget expectation report, suggests the potential extension of the favorable 15 percent income tax rate for corporate entities establishing new manufacturing units. This extension, if implemented, could be prolonged until March 31, 2025, with the aim of fostering increased private investments.

The government might enhance the appeal of the National Pension System (NPS) by expanding tax benefits on contributions and withdrawals, particularly targeting senior citizens aged 75 and above.

Rise in 80 C ?

Section 80C offers income tax advantages, allowing salaried individuals to claim deductions of up to ₹1.5 lakh when investing in tax-saving instruments such as the Public Provident Fund (PPF), five-year fixed deposit (FD), ELSS, National Savings Certificate, etc. Both individuals and Hindu Undivided Families (HUFs) qualify for income tax deductions under Section 80C of the Income Tax Act. Experts argue that there is a pressing necessity to increase the 80C deduction limit.

Numerous employed individuals heavily depend on Section 80C for income tax relief. There’s optimism that in the approaching Budget 2024, the deduction limit (currently set at 1.5 lakh) might see an increase. With the increasing cost of living and the 80C limit unchanged for nearly a decade, there’s a strong urge for an adjustment.

What you say about 80C in Interim Budget 2024 let us know in comment section below.

Standard Deduction :

Introduced in 1974, standard deduction resurfaced in India in 2018, replacing tax benefits for transport and medical expenses as part of tax reforms. Salaried individuals can claim this fixed deduction against their taxable salary without providing proof of expenses or investments.

It’s been nearly five years since the last update to the standard deduction, which happened in 2019. While the upcoming interim budget for 2024 may not bring comprehensive changes, there’s anticipation among middle-class taxpayers for potential tax benefits. Will Finance Minister Nirmala Sitharaman consider increasing the standard deduction from Rs 50,000 in Interim Budget 2024?

Before getting started there are two ways of Income tax returns can be filed i.e., old tax regime and new tax regime.

New Income Tax Regime, the new tax regime introduced in the Budget 2020 in India offers lower tax rates but without the benefit of most exemptions and deductions. Here are the tax rates under the new regime for the financial year 2023-24 (assessment year 2022-23) for individuals:

Please note that the above tax rates are subject to change and there may be additional taxes, surcharges or cesses applicable depending on various factors such as income sources, investments, etc. It is always recommended to consult a tax professional or refer to the official income tax website for the latest updates and details.

New income tax regime :

The major con of new tax regime is that there are no tax deductions to be claimed and it’s a straight forward way of paying the taxes according to the income earned.

May refer to the table above to know the taxable income according to the slab.Earlier there used to be tax refunds based on the savings made.

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Union budget for the year 2023 is released by Nirmala Sitharaman would likely to be in favour of middle class and lower middle class.

The most raised demand from employees to increase or restructure income tax slabs is considered in this budget.

The highlights of the Union Budget 2023 presented by the Finance Minister of India on February 1, 2023, are as follows:

1. Focus on infrastructure development with allocation of Rs. 5.54 lakh crore for the sector.
2. Healthcare sector to get Rs. 2.23 lakh crore for improvement of services and setting up of new facilities.
3. Agricultural sector to receive Rs. 1.41 lakh crore for farmer welfare and rural development.
4. Education sector to get Rs. 93,000 crore for improvement of quality and access to education.
5. Emphasis on boosting digital infrastructure and digital transactions with allocation of Rs. 1,000 crore for the same.
6. Creation of a National Recruitment Agency to streamline the recruitment process for various central government jobs.
7. Introduction of a new Personal Income Tax regime with lower tax rates and exemptions for individual taxpayers.
8. Implementation of the Rs. 1.75 lakh crore Garib Kalyan Rojgar Abhiyaan for the benefit of migrant workers and rural job seekers.

These are the major highlights of the Budget 2023.

Savings :

A new saving scheme for women has been announced by Finance Minister Nirmala Sitharaman named to be Mahila Samman Bachat Patra- a one-time i.e., lump-sum deposit savings scheme for a time period of 2 years up to March 2025.

This initiative will avail a deposit facility for a woman up to ₹2 lakh’s for a time period of 2 years at a fixed interest rate of 7.5% with a partial withdrawal option.

Budget 2023:

The Budget 2023 is a financial plan for the year 2023 that outlines the government’s revenue and spending plans. It typically includes projections for government income, such as taxes, and expenditures, such as social programs, defense, and infrastructure development. The budget is an important tool for the government to allocate resources and prioritize spending, and it can impact the economy and citizens’ daily lives. The exact details of the 2023 budget will depend on the country and its current economic and political context.

More Info:

Some general info you might need to know regrading the budget

1. Presentation:
   • The Union Budget of India is presented by the Finance Minister of India in Parliament. It outlines the government’s revenue and expenditure for the fiscal year, which runs from April 1 to March 31.
2. Components:
   • The budget typically includes estimates of government revenue and expenditures, allocation of funds to various ministries and departments, taxation proposals, and other financial matters.
3. Revenue and Expenditure:
   • The budget details how the government plans to generate revenue through taxes and other sources and how it intends to spend these funds on various programs, projects, and services.
4. Economic Policies:
   • The budget often reflects the government’s economic policies, priorities, and initiatives. It may include measures to stimulate economic growth, control inflation, and address social and infrastructure development.
5. Direct and Indirect Taxes:
   • Changes in direct and indirect taxes may be proposed in the budget. This includes income tax, corporate tax, customs duties, and goods and services tax (GST).
6. Allocation to Sectors:
   • The budget allocates funds to different sectors such as education, healthcare, defense, and infrastructure. The allocation is based on the government’s priorities and objectives.
7. Fiscal Deficit and Economic Indicators:
   • The budget includes information on fiscal deficit, revenue deficit, and other economic indicators. These figures provide insights into the government’s fiscal discipline and overall economic health.
8. Social Welfare Schemes:
   • The budget may outline allocations for social welfare schemes and programs aimed at benefiting various sections of the population.

Useful Info :

1. Union Budget:
   • The primary keyword, representing the annual financial statement of the government.
2. Fiscal Deficit:
   • The gap between the government’s total revenue and its total expenditure, excluding money from borrowings.
3. Revenue Deficit:
   • The difference between the government’s revenue expenditure and its revenue receipts.
4. Capital Expenditure:
   • Spending on acquiring or maintaining physical assets like infrastructure, machinery, etc.
5. Revenue Expenditure:
   • Day-to-day expenses incurred by the government, including salaries, subsidies, and interest payments.
6. Direct Tax:
   • Taxes levied directly on individuals and companies, such as income tax and corporate tax.
7. Indirect Tax:
   • Taxes imposed on goods and services, such as GST (Goods and Services Tax), customs duties, and excise duties.
8. Goods and Services Tax (GST):
   • A comprehensive indirect tax on the supply of goods and services across India.
9. Customs Duty:
   • Tax levied on the import and export of goods.
10. Economic Growth:
    • Refers to the increase in the country’s production of goods and services over time, often measured by GDP (Gross Domestic Product).
11. Inflation Rate:
    • The rate at which the general level of prices for goods and services is rising.
12. Social Sector Allocation:
    • Allocation of funds for social welfare programs, education, healthcare, and other social development initiatives.
13. Infrastructure Development:
    • Allocation for the development of physical and organizational structures and facilities, including transportation, communication, and energy.
14. Financial Inclusion:
    • Initiatives aimed at providing access to financial services to all sections of society.
15. Subsidies:
    • Financial assistance provided by the government to support specific sectors or groups.
16. Public Sector Undertakings (PSUs):
    • Government-owned corporations or enterprises engaged in commercial activities.
17. Disinvestment:
    • Selling part or all of the government’s stake in a public sector enterprise.
18. Digital Economy:
    • Budgetary provisions for promoting digital technologies, online services, and the overall digital transformation of the economy.

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What is section 80c of income tax act ?? Section 80C deduction allows savings upto INR- 1,50,000 for tax payers.

The demand for the rise in 80C limit is been observed since past two years as the inflation is raising and making the expenses of middle class increase day by day.

Saving is the best option available for the people to make themselves stable to face the inflation such that indian economy can also get a boost from the expenditure made by common man.

Budget which is to be presented in the month of february have high expectation from middle class section 80c provides a facility to save the money under various saving options.

Will be providing a overview on few deductions under section 80C.

• Tax Saving Deposits
• ELSS funds
• PPF
• Sukanya Samriddhi Yojana
• Tution Fees

80CCD deduction :

This section provides deductions for NPS account holders where additional INR- 50000 is added to savings under 80C.

NPS is a retirement scheme provided for citizens to have a monthly pension after the age of 60 Years. The amount added in this account is invested in market i.e., public, private sectors for more returns.

Can join or create account under NPS

Increase in 80C deduction :

Increase in 80C deduction, will there be a rise in savings of the middle class ?? an overview of the current situation

There is a demand for the rise of deduction limit under section 80C currently the limit is INR- 1,50,000 been expected to rise by 1 lakh that is INR- 2,50,000.

This is a request by various organisations and common people official decisions needs to be taken by central government.

In the month of february the final budget of current government is expected so there is huge expectations from this budget.

Budget Session :

Get latest updates of Budget 2023 from https://www.indiabudget.gov.in/

Saving :

Get started with savings scheme.

Post office saving scheme is one of the best option available to save your money. Recently there is a rise in the interest rates such that saving’s are further increased.

The various options available in post office saving scheme interest rate are as below.

Post Office Savings Account(SB)​ :

When you open a account in the post office then the rate of interest for your balance is 4% per annum. This account can be used to save you money and collect the interest from various schemes you invested in post office.

• Minimum amount of INR 500/- is required to open a account.

National Savings Recurring Deposit Account(RD):

Recurring deposit can be made every month with a specific amount. For example you want to deposit 1000 rupees per month in your RD then you will be provided interest rate of 5.8% on the accumulated money.

National Savings Time Deposit Account(TD):

Time deposit can be classified in a deposit made for period of time like 1 yr, 2 yr, 3yr and 5 yr.

• Minimum amount of rupees INR. 1000 needs to be deposited.
• Only 5 year deposit qualify for 80c deduction’s.

National Savings Monthly Income Account(MIS) :

This scheme is for those who are expecting a monthly pension kind of payment here you can avail 7.2 % of interest such that every month the interest is deposited in you post office savings account.

• There is a cap of 4.5 lakhs upto which a individual can deposit. And joint account holders can invest 9.0 lakhs (4.5 individual)

Senior Citizens Savings Scheme Account(SCSS) :

This scheme is for senior citizens who are above 60 years of age are planning to earn a pension by depositing lump sum amount in post office.

• There is a cap of 15 lakhs upto which a individual can deposit.
• Deposit qualify for 80c deduction’s.

Public Provident Fund Account(PPF )​ :

Provident fund is deposit which can be made in instalments or lump-sum such that interest is calculated yearly at the rate of 7.1%. This scheme can also be a post office saving scheme for boy child or girl child can also invest.

• *** Amount invested will be returned after 15 years of time period.
• Minimum amount of rupees INR. 500 needs to be deposited.
• There is a cap of 1.5 lakh upto which a individual can deposit in a year.
• Deposit qualify for 80c deduction’s.

Sukanya Samriddhi Account(SSA)​ :

This deposit is purely for a Girl child(post office saving scheme for girl child) such that the amount is calculated at a interest rate of 7.6%.

• Minimum amount of INR. 250 and Max INR. 1,50,000 to be invested every year.
• Deposit can be made in lump-sum or in instalments in multiples of INR. 50
• Deposit qualify for 80c deduction’s.

National Savings Certificates (VIIIth Issue) (NSC) :

In this scheme you can save you money for a period of 5 years with an interest rate of 7%.

• Minimum amount of INR 1000/- to be invested every year.
• Deposit qualify for 80c deduction’s.

Kisan Vikas Patra(KVP) :

From the date of deposit the money shall be doubled in a span of 10 years. Minimum amount of rupees 1000 needs to be invested.

• Minimum amount of rupees INR. 500 needs to be deposited.
• No max limit.

Post Office Saving Scheme Get Started :

Post office saving scheme is a trusted option to save your money and below i am providing you the official website so that you can find much more detailed information.

In this blog i have provided the main overview so that you can identify the schemes and select your way of investment.

Here is the official Department of Post Website to get started with post office saving scheme deposit. https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx

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