The deduction limit under section 80C should be raised from the current ₹1.5 lakh to ₹2.5 lakh in Budget 2023, the Institute of Chartered Accountants of India (ICAI) suggested in its Pre-Budget Memorandum 2023, reported The Economic Times.
Raising the limit of section 80C has been a long-standing demand of the industry. It was last hiked from ₹1 lakh to ₹1.5 lakh in the financial year 2014-15. It is vital to note that this deduction under section 80C is available only to those who opt for the old tax regime while filing the income tax return.
ICAI has also suggested raising the annual limit for the contribution to Public Provident Fund (PPF) from the current ₹1.5 lakh to ₹3 lakh in Budget 2023.
ICAI said, “PPF is used as a means of savings by entrepreneurs and professionals. While the assessees in employment have the compulsion of saving 12 per cent of their salary (with matching contribution from employers), the only safe and tax efficient saving option available for self.”
"Further, the present limit of ₹1,50,000 has not been increased for several years and requires reconsideration. The revised monetary limit will help in increasing the savings of individuals and is necessary keeping in view the rate of inflation," it added.
Further, it has suggested that the "full deduction for health insurance premium paid under Section 80D may be allowed and not to tag it with a deduction for medical expense. Apart from the deduction for health insurance premium, a separate deduction for medical expenses incurred should be made available."