New Delhi | Jagran Business Desk: The Central government is expected to enhance the Income Tax deduction limit under Section 80 C of the IT act from the current Rs 1.5 lakh to Rs 3 lakh in the Union Budget slated to be presented by Finance Minister Nirmala Sitharaman in the Parliament in February 1.  

The existing limit of Rs 1.5 lakh had been revised from Rs 1 lakh back in 2014, after being kept unchanged for over 18 years. "It is expected from the upcoming budget 2021 that there should be an increase in the deduction limit of section 80C from Rs 1,50,000 to 3,00,000 per annum," Financial Express quoted Ankit Sehra, Founder and Tax Expert, Ankit Sehra & Associates, a saying.  

The government, however, is likely to keep the tax slabs intact this year, meaning there would not be any change in the personal tax rates after this Union Budget. In a survey conducted by Federation of Indian Chambers of Commerce and Industry (FICCI) and Dhruva Advisors, as many as 40 per cent of the participants felt the key theme for the direct tax proposal in this year's budget should be personal tax relief. 

Currently, those with taxable income of upto Rs 2.5 lakh do not have to pay any tax. Increasing the tax deduction limit, while keeping the tax slab intact is likely to boost the investment.  

Sehra told the paper he hopes that the Finance Ministry would adopt a clear distinction between the shot-term and long-term savings this time. Presently, there is no major support in the tax policy to encourage long-term savings. 

"Life insurance and Pension funds are a major source of savings for long-term purposes. This time, we can expect that the government would consider the separate exemption limit for both of them apart from section 80C," Sehra said. 

Posted By: Lakshay Raja