The announcement of the budget for the FY 2018-19 is not far away and it is highly expected that the finance ministry in order to promote individuals to channelize more income towards financial instruments raise the investment limit under section 80C to Rs. 2 lakh as against the current Rs. 1.5 lakh.
Section 80C provides for tax deductions for any investments made towards fixed deposits, mutual funds, insurance and other post office savings schemes upto a maximum of Rs. 1.5 lakh in a financial year. The limit is applicable from the financial year 2014-15.
Other expenses for which section 80C deduction is allowed includes any principal re-payment towards home loan and tuition fee.
This move if implemented is also aimed at reducing diversion of individuals' surplus cash in non-productive assets including gold.
So, with the increase in investment limit, an individual shall get a maximum deduction of Rs. 2 lakh on his gross annual income and then shall be taxed as per the tax slab rate.