Budget 2023: The Institute of Chartered Accountants of India (ICAI) has submitted the “PRE-BUDGET MEMORANDUM – 2023 for DIRECT TAXES AND INTERNATIONAL TAXATION.
In that ICAI stated that:
Section 80C – Various suggestions
Issue/Justification:
PPF is used as a means of savings by entrepreneurs and professionals. While the assessees in employment have the compulsion of saving 12% of their salary (with matching contribution from employers), the only safe and tax efficient saving option available for self-employed assessees is PPF. Hence, the suggestion to increase the ceiling of PPF contribution to Rs.3 lakhs. This may also boost domestic savings as a percentage of GDP and will have an anti-inflationary impact. Further, the present limit of INR. 1,50,000 has not been increased for several years and requires reconsideration. The revised monetary limit will help in increasing the savings of individuals and is necessary keeping in view the rate of inflation.
Budget 2023: ICAI Suggestion to Increase section 80C limit
a) the annual limit for contribution to PPF be increased to Rs. 3 lakhs from the present ceiling of Rs. 1.5 lakhs.
b) the maximum limit for deduction under section 80CCF may be increased from Rs.1.5 lakhs to Rs.3 lakhs
c) full deduction for health insurance premium paid u/s.80D may be allowed and not to tag it with deduction for medical expense. Apart from deduction for health insurance premium, a separate deduction for medical expenses incurred should be made available. The justification for such separate deduction is lack of social security cover and the inability of public health sector to cater to the needs of the tax payers by providing efficient hygienic and timely medical treatment
d) the limit for deduction under section 80DDB for expenses incurred on treatment of certain chronic diseases may be increased. As per section 80CCC, if any contribution is made by the assessee to a pension fund and deduction is claimed under that section, all withdrawals from the scheme by the assessee (including the principal amount) ARE SUBJECTED TO TAX. This is causing hardship in respect of those assessees who have simply made contributions to this scheme and have not claimed any deductions. Hence, the suggestion to amend this section to the effect that in cases where deduction is not claimed under this section, only the appreciation component of the investment will be subjected to tax. Even if deduction is claimed, only the amount of deduction claimed should be added to the income at the time of withdrawal from the scheme and not the entire maturity proceeds. Of course, any appreciation over the principal invested can also be taxed as capital gain.
(e) The quantum of deduction under section 80C be increased from Rs 1,50,000 to Rs 2,50,000 to provide savings opportunities to public at large. (SUGGESTION FOR REMOVAL OF ADMINISTRATIVE AND PROCEDURAL DIFFICULTIES RELATING TO DIRECT TAXES).
