Budget 2019: Hike in the Tax Exemption Limit

Narendra Kumar

22 Jun, 2019

In the “Financial Stability and Development Council” meeting held on 20th June 2019, the highlights of the upcoming Budget 2019 were discussed. The last Union Interim Budget was chaired by then acting Finance Minister Piyush Goyal who announced that the ceiling for tax exceptions.

Announcements of the Financial Stability and Development Council meeting and Budget 2019

The 20^th Financial Stability and Development Council (FSDC) meeting was held on 20th June 2019.

The key highlights of the FSDC meeting include:

• The Indian government is planning on increasing the personal income tax threshold to 3 lakhs from 2.5 lakhs for the salaried class
• New tax reliefs may be introduced that will give a push to Pradhan Mantri Aawas Yojna(PMAY), according to which the goal of “Housing for all” has to be achieved by 2022
• This meeting reviewed the current global and domestic economic situation, the overall macroeconomic situation and financial stability issues including the concerned Banking and Non-Banking Financial Company (NBFC)
• The progress made towards setting up of Financial Data Management Centre (FMDC) for strengthening the cyber security framework for financial sectors.
• Financial sector regulators like SEBI, RBI, IRDA, PFRDA, and IBC presented their proposals for the upcoming Budget 2019.
• The Council also paid attention to the activities done by FSDC Subcommittee chaired by Reserve Bank of India Governor and the action taken by the Members in the earlier Meetings of Council.

A Glimpse of Interim Union Budget 2019

The last interim union budget was held on 1^st February 2019. Presented by then acting Finance Minister Piyush Goyal. In this meeting, the government announced that income tax relief under section 87A is for taxpayers having income up to Rs. 5,00,000. Other announcements of this Budget are:

• Fiscal deficit for 2020-2021 will be 39.4% of GDP.
• A budget of Rs. 6000 for farmers having less than 2 hectares of land.
• Allotment of Rs. 60,000 crore to MGNREGA
• Also,for the salaried class, the Standard deduction has been raised to Rs. 50,000 etc.

Also Read: Budget 2019: Key Highlights of Interim Budget at a Glance.

What is the New Threshold for Tax in 2019?

The tax exemption limit is raised from the existing ceiling, which is 2.5 lakhs afterwards to 3 lakhs per annum for salaried class.

List of  Various Tax Exemptions  

There are various types of tax exemptions provided by Section 10 of the Income Tax Act. These are given under

• House rent allowance (HRA)
• Allowance on transportation
• Children education allowance
• Subsidy on hostel facility
• Income tax exemption on housing loan
• Section 80C

Furthermore the deductions mentioned in chapter VI A of Income Tax Act

• Rajiv Gandhi Equity Saving Scheme -Section 80 CCG
• Medical Insurance Deduction- Section 80 D
• Income tax exemption for maintenance of a disabled dependent- Section 80 DD
• Serious element Deduction- Section 80 DDB
• Deduction on loan for higher studies- Section 80 E
• Section 80 G- Deduction for donations
• Deduction on house rent paid- Section 80 GG
• Saving account interest deduction- Section 80 TTA
• Deduction for disabled- Section 80 U
• Other Deductions
  • Section 80 GGA
  • Section 80 GGC
  • Section 80 QQB
  • Section 80 RRB

Closure

As per the discussion held in the Financial Stability and Development Council meeting, a various announcement were made. Among those discussions, the topics to be discussed in the upcoming budget 2019-20 were also discussed. The conclusion of that discussion in context to the forthcoming Budget the announcements which were made was the new threshold for tax exemption was set to three lakhs, which was previously two lakhs fifty thousand.

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