The Modi government's first budget had been a major bonanza for the salaried class. After all, it had not only increased the investment limit under Section 80C, after a decade, but also raised the personal income tax exemption limit from Rs 2 lakh to Rs 2.5 lakh. But the following budgets have not really been evocative of 'acche din', with critics accusing the finance minister of giving with one hand and taking away with the other.

Given that Budget 2019 is the current regime's last one ahead of the general elections in summer, speculation is rife that it will be a populist one. The wishlists of the common man and industry bodies have one thing in common: A demand for an increase in the maximum deduction limit under Section 80C. The logic is that that the hike of Rs 50,000 granted in Budget 2014, which increased the tax exemption limit from Rs 1 lakh to Rs 1.5 lakh, hardly provides any relief in the face of rising cost of living and inflation.

"It has been almost 5 years since the limit for investments under section 80C was revised upwards. We feel that the time is ripe to increase the limit for investments under 80C from the current Rs 1.5 lakh. This could have a positive impact on the markets as well as it will encourage citizens to invest in financial assets," said Anirudha Taparia, Executive Director, IIFL Wealth Management.

While most experts say a hike to Rs 2 lakh would also help, the Confederation of Indian Industry (CII) recommended that the limit be raised to Rs 2.5 lakh to provide saving opportunities to public at large. This is an important point since India's household savings rate dipped from 34.6% in FY12 to 30% at the end of March 2017.

Moreover, for many people, the current 80C limit quickly gets exhausted through expenses like tuition fees, provident fund contributions and payments made against home loan principal. This leaves little room to save through permissible investments such as five-year notified tax-saving bank deposits, Public Provident Fund (PPF), National Savings Certificate (NSC), equity-linked savings schemes (ELSS), subscription to notified securities and deposits schemes, and more. An increase in this limit will, hence, allow individuals to channelize long-term savings into capital markets.

So, assuming that the Section 80C deduction limit is increased to Rs 2 lakh, how much do you stand to save? Assuming the enhanced limit is fully utilised, those with income up to Rs 5 lakh, who fall in the 5% slab, will reportedly save tax up to Rs 2,500. But those falling in the 20% and 30% tax brackets stand to save around Rs 10,000 and Rs 15,000, respectively.

Edited by Sushmita Choudhury Agarwal