Increase Limit of Deduction Under Section 80C

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Under the existing provisions
of section 80C of the Act, an individual or a Hindu undivided family, is
allowed a deduction from income of an amount not exceeding one lakh
rupees with respect to sums paid or deposited in the previous year, in certain specified
instruments. The investments eligible for deduction, specified under
sub-section (2) of section 80C, include life insurance premia,
contributions to provident fund, schemes for deferred annuities etc.
The assessee is free to invest in any one or more of the eligible instruments
within the overall ceiling of Rs. 1 lakh.
The limit of above
investments eligible for deduction under section 80C was fixed vide Finance
Act, 2005. In order to encourage household savings, it is proposed to raise the
limit of deduction allowed under section 80C from the existing Rs. 1 lakh to Rs.1.5
lakh. In view of the same, consequential amendments are proposed in sections
80CCE and 80CCD of the Act.
These amendments will
take effect from 1st April, 2015 and will, accordingly, apply in relation to
the assessment year 2015-16 and subsequent assessment years.
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