The Union Budget 2020-21 today is likely to bring cheer for the salaried taxpayers as the government may raise the public provident fund (PPF) threshold from Rs 1.5 lakh to Rs 2.5 lakh.
The Finance Ministry is also considering a separate segment under Section 80C (of the Income Tax Act) to provide tax exemptions of up to Rs 50,000 under the National Savings Certificate (NSC).
The ministry is also planning to permit tax exemptions of up to Rs 2.5 lakh for savings under Section 80 C (of the Income Tax Act).
"A proposal to allow tax incentives on the small savings scheme, especially PPF and NSC, is with the finance ministry. If given a go-ahead, these would be part of the budget announcement," an official told the The Economic Times earlier in the month.
FULL COVERAGE:Union Budget 2020
The proposed tax incentives will allow taxpayers to save more money, he further said. Finance Minister Nirmala Sitharaman is likely to make these announcements during her Budget 2020 presentation on February 1.
Currently, there is a tax exemption limit of Rs 1.5 lakh (under Section 80C of the Income Tax Act), which comprises investments made under the PPF route. NSC is also included in this exemption.
India's household sector's saving rate dipped to 17.2% in FY18 from 23.6% of GDP in FY12 (FY19 data is not available). Household savings since FY12 have been hovering around 7% of GDP, the news daily reported.