INCOME TAX INCENTIVES FOR SAVINGS ..

Tax incentives are allowed to individuals & HUFs (Hindu Undiveded Family) in respect of specified savings to channelise them into targeted sectors having a definite impact on growth of the economy.

The various amendments in these incentives during the study period have been shown in the below.

INCENTIVES FOR SAVINGS ..

Eligible schemes	Nature of incentive		Sec.		Maximum qualifying amount		Period
Statutory, Recognised and Public Provident Fund, life insurance premium, National Saving Scheme, National Savings Certificates, Unit linked insurance plan, notified mutual funds, repayment of house loan (principal component) etc.	Rebate 20 per cent of net qualifying amount		88		Rs. 70,000		till A.Y. 2000-2001
-do-		88		Rs. 1,00,000		A.Y. 2001-02 to 2002-03
Rebate as a percentage to net qualifying amount 1) 30 % if GTI up to 100000 2) 20 % if GTI up to 150000 3) 15% if GTI upto 500000 4) no rebate if GTI exceeded 500000		88		Rs. 1,00,000		A.Y. 2003-04 to 2005-06
Deduction (replaced rebate)		80C		Rs. 1,00,000*		A.Y. 2006-07
In addition to above term deposit with a scheduled commercial bank for minimum five years	Deduction		80C		Rs. 1,00,000*		A.Y. 2007-08
In addition to above deposits in senior citizen saving scheme	Deduction		80C		Rs. 1,00,000*		A.Y. 2009-10
In addition to above long term infrastructure bonds (notified)	Deduction		80C +80CCF		Rs. 10,0,000* +Rs.20,000		A.Y. 20010-11
Investment Deduction *	Deduction		80C		Rs. 1,50,000		From AY 2015-16

  * PF, PPF, Life Insurance Primium,. Education Expense, National Savings Certificates,

Unit linked insurance plan (ULIP), notified mutual funds (ELSS),

repayment of house loan (principal component) etc.

The above Table depicts that Government raised the net qualifying amount to Rs. 1,00,000 under Section. 88 in A.Y. 2001-02 and replaced tax rebate by deduction under Section 80 C with effect from A. Y. 2006 -07 during the study period. 

It is worthwhile to note that the limit of deduction for savings has not been revised since A.Y. 2001-02 despite sharp increases in propensity to save particularly in case of middle class taxpayers. Thus, Government should enhance this limit for boosting capital formation as well as for providing social security to taxpayers.

The Financial Year 2014-15 (AY 2015-16) 80C Investment Deduction increase from Rs. 1 lakh to Rs, 1.5 lakh.

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