Less than 24 hours are left for the presentation of Budget 2024. Investors also have high expectations from the government in the budget. In such a situation, investors are also hoping that the government may increase the limit of Income Tax Section 80C. If Finance Minister Sitharaman announces an increase in this limit in the budget, then those investing in Equity Linked Savings Scheme (ELSS) mutual funds will get good benefits from it. This is because it will give them better opportunities for tax savings and increase in investment.
failed to keep pace with inflation
According to the report, the demand from investors to increase the Income Tax Section 80C deduction limit stems from the current limit of ₹1.50 lakh, which was set in 2014 during the tenure of late Arun Jaitley as Finance Minister. According to a Livemint report, the increase in the Section 80C deduction limit is necessary because it has not kept pace with inflation since 2014. The adjustment will help taxpayers mitigate the impact of inflation and promote savings and investments in important financial instruments like ELSS, Tax Saver FD and PPF.
If LTCG limit increases then you will get benefit
Experts believe that increasing the LTCG limit from ₹ 1 lakh to ₹ 3 lakh in the budget will provide a lot of relief. The new tax imposed on debt mutual funds harms their growth. Investors are demanding withdrawal of this tax or at least restoration of indexation benefit for debt mutual funds. ELSS funds are one of the top investment options for the salaried class and self-employed. By investing in it, they are able to make significant tax savings under Section 80C of the Income Tax Act.
ELSS Funds
ELSS funds are the only mutual funds eligible for tax deduction under Section 80C of the Income Tax Act, 1961. Investors can claim a deduction of up to ₹1.5 lakh by investing in different tax saving options. ELSS funds have a lock-in period of just three years which is lower than other Section 80C investments. The benefits from ELSS mutual funds are tax free. This creates the possibility of high returns from investing in the equity market. Also, withdrawals from ELSS mutual funds are also tax free.
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