The Institute of Chartered Accountants of India (ICAI) has suggested that the government increase the maximum Public Provident Fund (PPF) deposit limit to Rs 3 lakhs. Presently, the PPF deposit limit for the financial year is Rs 1.5 lakh.
As per the pre-budget memorandum on Direct and International taxation, the ICAI has suggested increasing the ceiling limit of PPF contribution to Rs 3 lakhs to help individuals improve their savings. ICAI has stated that the salaried people compulsorily save through a 12% contribution in PF (with a matching contribution from employers). Still, the only safe and tax-efficient savings option for self-employed persons is PPF. Hence, increasing the ceiling limit to Rs 3 lakhs will boost the domestic savings as a percentage of GDP and have an anti-inflationary impact.
It further proposed that the present limit of Rs 1.5 lakh under Section 80C shall be increased since it has been many years since the limit is not revised. If the 80C limit is revised, it will help improve the public’s savings at large.
Some other suggestions by ICAI related to Chapter VI-A deductions include:
- Deduction of medical expenses should be allowed separately and not club it with health insurance premiums paid under Section 80D.
- Increase in limit of Section 80DDB for expenses incurred treatment of chronic diseases.
- Reconsideration of a ceiling limit of 10% of gross total income under Section 80G.
- Interest on all types of deposits (for example, Fixed deposit receipts) may also be considered for deduction under Section 80TTA.
Finance Minister Nirmala Sitharaman will present the Union Budget 2022-23 on 1st February 2022.
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