RBI Governor Raghuram Rajan has pitched for increasing the tax exemption limit on financial investments by individuals from Rs 1.5 lakh. Rajan was talking in Mumbai yesterday during a conference call with analysts. Acknowledging that there was a Rs 50,000 increase in the limit in the last budget, he said the real tax benefit has been lost over time as the limit was anchored at Rs 1 lakh for a long time.
Investments of up to Rs 1.50 lakh in Public Provident Fund, Provident Fund, New Pension Scheme, insurance policies and equity-linked saving schemes is deducted from the taxable income under Sec 80 C. This helps in financial savings.
It can be noted that the national savings rate has dipped to 30 per cent level from a high of over 36.9 per cent in Financial Year 2008.
Union Finance Minister Arun Jaitley, who increased the limit in his budget last year, will be presenting the first full fiscal budget of the new Government on the 28th of this month.