Under the existing provisions of section 80C of the Indian Income Tax
Act, an individual or / a Hindu undivided family (HUF), is allowed a deduction
from income of an amount not exceeding
Rs. 1 lakh 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 premium, contributions to Provident Fund
(PF), Public Provident Fund (PPF), 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 80 C
was fixed vide Finance Act, 2005.
In order to encourage household savings, it is proposed to raise the
limit of deduction allowed under section 80 C from the existing Rs.1 lakh to
Rs.1.5 lakh.
In view of the same, consequential amendments are proposed in sections
80 CCE and 80 CCD of the Act.
These amendments will take effect from 1st April, 2015 & will,
accordingly, apply in relation to the assessment year 2015-16 and subsequent
assessment years.
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