Rajan said that the benefits of this section have been lost over time as the limit was anchored at Rs.1 lakh for a long time.
RBI Governor Raghuram Rajan has pitched for increasing tax saving investments limit under Section 80C of the Income Tax Act, says a PTI report published in The Economic Times.
Earlier in July 2014, the Finance Minister Arun Jaitley had announced to increase the savings limit from Rs.1 lakh to Rs.1.50 lakh in his Union Budget 2014 speech. The hiked limit resulted in higher inflows in ELSS. AMFI data shows that the category has received net inflows of Rs.1316 crore from July to December 2014.
According to the report, Rajan said that the benefits of this instrument have been lost over time as the limit was anchored at Rs.1 lakh for a long time. "Remember the government increased the limit for tax benefit in savings by Rs 50,000 in the last budget. The question is -- is there room for more primarily because the real tax benefit has fallen over time because the limit was at Rs. 1 lakh for a long time. Maybe what we have to do is increase that," Rajan is stated to have said.
Though the authority to take a call for hiking this saving investments limit is with the policymakers, the RBI Governor’s voice can make a strong impact on such decisions.
