Limit for deduction under Section 80C of the Income Tax Act, 1961 has been enhanced from Rs 100,000 to Rs 150,000 in the Union Budget 2014. Enhanced deduction is applicable from Assessment Year 2015-16 corresponding to Financial Year 2014-15. Potential tax savings will be from Rs 5,000 to Rs 15,000 (excluding education cess and surcharge) depending on the applicable income tax rate of the assessee.
Section 80C is an important tax planning tool available to Individuals and Hindu Undivided Family (HUF). Not only will it benefit people with reduced tax liability but also force increased savings. Hence it is advisable to ensure maximum possible deduction under this section is availed by the assessee while computing income tax liability. Please see Saving Income Tax through Smart Tax Planning – Guide to Section 80C Deductions to understand the various eligible investments and payments allowed for this deduction.