The Direct Tax Bill has proposed to introduce a new investment scheme to avail tax exemption. In this scheme, an investor can invest up to Rs 50,000 in life insurance policies, health insurance and children's tuition fees.
One can also invest up to Rs 1 lakh in a year in approved securities like employees provident fund (EPF), public provident fund (PPF), pension fund and other approved securities.
At present, one can invest up to Rs 1.10 lakh in a host of instruments like EPF, PPF, pension plan, insurance, equity-linked savings schemes ( ELSS), Unit Linked Investment Plan ( ULIP) and children's tuition.
Besides this, there is a separate category of Rs 10,000 to invest in infrastructure bond and Rs 15,000 in health insurance. One can invest up to Rs 1,35,000 in various instruments.
"Though, the limit has been marginally been increased, it has now been segregated in two schemes. So the freedom to invest most of the income in one particular scheme has been curtailed now," deputy CEO and chairman of KPMG Dinesh Kanabar said.
The increase in the limit of investment from Rs 1.35 lakh to Rs 1.5 lakh will enable a big investor, having more than Rs 10 lakh annual income, to save an additional Rs 4,500. His savings will go up from Rs 40,500 to Rs 45,000.