Section 80C: Hoping For More

There isn't much in the offering for taxpayers when it comes to Section 80C benefits. For long, the limit has remained fixed at ₹1.5 lakh, though average income has grown manifold

- NILANJAN DEY, Director, Wishlist Capital

The penny has dropped. There seems to be no specific scope for insurance in the grand scheme of things related to tax savings, as legislated by the authorities, apart from what is being already offered.

This cold-shouldering is in stark contrast to the expectations that have built up in various pockets of the insurance sector. The latter, now greatly focused on the retailisation in the mass market, had strongly urged the government to broaden the scope of tax sops as fresh incentives for higher sales.

What might seem odd in this context is the near-absence of any particular incentive for the average taxpayer, troubled though he is with only a handful of options. Many of these stem from the fabled Section 80C of the Income-tax Act, 1961.

For the record, the scope of such options has remained range-bound for long, resulting in a demand for its expansion.

Those who believe in insurance, not to mention mutual funds, as a savings option, are especially constricted in the process. These are absolutely ordinary Indians who are now willing to leverage their investments for growth, incomegeneration and tax savings-not necessarily in that order.

Here we are primarily concerned with the average tax saver in this context. He is fully aware of the limited space he is currently operating from. But in reality, that space has not grown in size and stature for years. To cut a long story short, admissible savings under the relevant section (Section 80C) has stayed restricted to ₹1.50 lakh for a long time. Meanwhile, average income has grown, lending credence to the belief that ordinary Indians now not only need a higher savings limit, but also a larger basket of taxefficient instruments.