I would say closing the card bcoz bank isn't increasing limit is little too much, as the limit was decent.
As long as your single transaction is not more than 1.06L, you can always use the card, make payment, use the card and continue.
By this approach, you can make purchases of more than 1.06L within one statement. Common man, we Indians are that much Jugaadu.
It's little difficult to get LE for self-employed people (assuming this, since you only submitted Form16)
If you are salaried, then you could've submitted salary slips of last 3 months + recent 3 month's bank statement showing salary credits, to get up-to 1/3rd of your annual CTC as limit.