In a bold move to simplify tax laws, the
finance ministry is considering a plan to replace the tax benefits given to
individuals for investing in specified savings instruments such as life
insurance and provident funds with an upfront higher basic tax exemption limit.
If the proposal makes it into Union Budget for
2015-16, the current Rs.1.5 lakh deduction from the taxable income of individuals
for investments in specified savings instruments under Section 80C of the
Income Tax Act would be discontinued. Instead, the basic exemption limit would
be correspondingly enhanced.
That is, individual’s income up to Rs.4 lakh, or
thereabouts, could be exempt from tax, up from Rs 2.5 lakh currently.
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