Income Tax Changes Budget 2024: In the recent Budget 2024 speech, the Finance Minister kept the Section 80C tax deduction limit unchanged.
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The maximum limit for claiming tax benefits under Section 80C remains at Rs 1.5 lakh for the current fiscal year 2023-24 and will stay the same for individuals looking to save on taxes through Section 80C investments in the upcoming fiscal year 2024-25.
Section 80C of the Income-tax Act lists different investments and expenses eligible for tax deductions. Individuals can reduce their gross taxable income by up to Rs 1.5 lakh per financial year by engaging in these specific investments or expenditures.
You can save on taxes through Section 80C by investing in things like Employees’ Provident Fund (EPF), Public Provident Fund (PPF), Equity Linked Saving Scheme (ELSS) mutual funds, National Savings Certificate (NSC), and 5-year tax-saving fixed deposits with banks or post offices. Additionally, paying life insurance policy premiums also qualifies for tax benefits under Section 80C.
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It is important to note that each eligible investment comes with its specific maximum limit, rate of return, liquidity, and taxation rules for the earned returns, states ET in a report. For instance, the most you can invest in PPF in a financial year is Rs 1.5 lakh. Meanwhile, there’s no limit on the amount you can invest in ELSS mutual funds, but the Section 80C deduction is capped at Rs 1.5 lakh.
If individuals can’t make specific investments, they can still get deductions under Section 80C from their gross taxable income through certain expenses. These expenses include repaying the principal amount of a home loan, tuition fees for children, payment of stamp duty, registration fees, and other costs related to buying a house.
Since the financial year 2020-21, individuals without any business income must annually choose between the old and new tax regimes. As of the fiscal year 2023-24, the new tax regime is the default option.
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Consequently, individuals seeking tax deductions under Section 80C must opt for the old tax regime since this deduction isn’t available in the new tax regime. It’s crucial for taxpayers to be aware of these rules to make informed decisions about their tax planning and investment strategies.
