The Union Budget 2018 is all set to be presented by the Finance Minister Arun Jaitley on February 1st, 2018. It is an exciting time of the year when we all look up to the Finance Minister Arun Jaitley to see what unique opportunities are in store for us.
As we know, the tax evasion is a crime but the tax avoidance is not. The Government gives you enough opportunity to save your taxes and increase income. Now if you are thinking of the budget 2018 India will allow you save more in taxes, or will the deduction limit under Section 80C be increased, or what’s new in the India Budget 2018–19, go through the details below.
Let’s talk about top few expectations from the budget 2018-19, the first one post GST:
A rise in Section 80C limit to Rs. 2 Lakhs
Section 80C motivates you to invest in the instruments like PPF, NSC, ELSS, etc. as it allows you some tax benefits. Until now you were getting a maximum deduction of up to Rs. 1.5 Lakhs per year as per the Section 80C. The premiums of life insurance plans, EMI or the principal amount on the home loan, investments in these financial instruments like PPF, NSC, ELSS, schemes like Senior Citizen Savings Scheme, Tax Saver FD, Sukanya Samriddhi Yojana, and many more are eligible for the tax benefits according to the Section 80C.
The deduction limit under Section 80C was kept at Rs 1.5 Lakh, by the FM Arun Jaitley since July 2014–15. There are chances that this year, the deduction limit under Section 80C will be raised to Rs 2 Lakhs.
Term life insurance plans to get a separate deduction
This is yet another change we may expect. The premiums on life insurance plans such as endowment life insurance plans, term life insurance plans, ULIPs, allow a tax deduction according to the Section 80C. The total deduction of Rs 1.5 Lakhs a year under Section 80C is currently shared among different life insurance plans, EMI or the principal amount on the home loans, and other investments instruments like PPF, NSC, ELSS, Senior Citizen Savings Scheme and some other investments.
Since Section 80C is getting messy, we may expect such a move. The insurance industry has demanded a separate limit for specifically the life insurance plans. Among all the LIC’s, the term life insurance is the most crucial one since it is a super protection plan that has no survival benefits.
Till 60% of the NPS Corpus may become tax free
If you invest in the National Pension Scheme or the NPS, you would know that on the retirement at the age of 60, the 40% of the collected money in your NPS corpus account has to be mandatorily used to purchase an annuity plan.
Please note that the money which is invested in an annuity plan is non-taxable, but the pension you get from the annuity plan is taxable. Since in the remaining 60% of the NPS Corpus, only 40% is tax free, the citizens are in a problem.