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The interim budget of 2019 came as a big relief for the common people of India. Accordingly, Finance Minister Piyush Goyal proposed many changes in the rules of Income Tax for the year 2019-20. From an increase in tax rebate on income to an increase in the standard deduction, the government announced some key income tax changes in Budget 2019.
So in this blog, we would give you a glance at these changes and how they can impact you.
Now let us try to understand the above changes in detail:
Surprised to know this? Well, any individual taxpayers who are having a taxable annual income up to Rs. 5 lakh will be liable to get the full taxable rebate. Therefore, they would be not liable to pay any income tax. Here please don’t get confused with the income tax exemption. This is the rebate which is applicable to those with annual income up to Rs. 5 lakh.
Moreover, people with gross taxable income up to Rs. 6.5 lakh will have to pay no tax if they make investments in provident funds, specified savings, insurance, etc. As they can show the investments up to 1.5 lakhs under the exemption head.
If your taxable income does not exceed Rs 5 lakh a year (after claiming all the deductions under sections 80C to 80U and other tax-exempt allowances) you can end up paying zero taxes
The standard deduction was re-introduced in the year 2018 under the income tax slab. The standard deduction of Rs. 40,000 has been proposed in Budget 2018. Further, it will replace the existing deductions of Rs. 19,200 and Rs. 15,000 for transport allowance and medical reimbursement respectively.
You must be aware that a standard deduction reduces your taxable income. Hence, it will reduce your tax liability. For salaried individuals and pensioners, the standard deduction has been increased from Rs. 40,000 to Rs. 50,000.
|Net Income After 80C Deduction||Tax||Benefits|
|AY 2019-20||2020-21||AY 2019-20||2020-21|
|Net Income||Increase in Standard Deduction||Net Income|
As a result, for salaried individuals and pensioners, aan dditional increase of Rs 10,000 in standard deduction can help in reducing their taxable income up to Rs 5 lakh.
Presently the exemption in capital gain is only applicable to one house property. Under the new income tax slab, the capital gain exemption of one-time benefit of capital gains has now been applicable on reinvestment in two house properties. Please note that this tax benefit is applicable in case the amount of capital gain is Rs 2 crore or less.
Hence, it is a big relief for individuals who could not completely utilize the capital gains from the sale of the house by either purchasing or constructing a house would now be able to use them to purchase two houses.
However, it is important to note that your capital gains should not exceed Rs 2 crore. Further, this benefit can be availed only once in a lifetime.
Do you also own two self- occupied houses? Well, you have good news to read. Home-owners will not be required to pay any tax on notional rent if they own more than one self-occupied property. As per the latest budget proposals, the exemption has been proposed on the income tax from the notional rent on the second -self-occupied house.
Hence, in case you own a second house which is not let-out, then you do not have to pay tax on the income which is actually not earned by you.
Now, this comes as a big relief for the small depositors and the non-working spouses. The threshold on TDS on interest from bank or post office deposits has now been increased to ₹40,000. The current limit as of now was ₹10,000. In simple words, interest income on bank/post office deposits up to ₹40,000 will not be subject to any TDS.
Hence, it will surely bring a smile on those landlords who might have given their property to the non-individuals. For example Corporates. Additionally, it will give a lot of convenience to those people who majorly depend on the rental income.
So these were the major income tax changes introduced in the interim budget of 2019. The above major highlights have surely grabbed a lot of eyes.
Let’s wrap it up
This year budget has come up as a big relief for the middle-income group of taxpayers. Not only was the above Income tax changes are remarkable but the entire Interim Union Budget 2019 seems to be impressive. These changes will surely increase the collection of the government. On the other hand, it will help taxpayers to file income tax returns in a more simplified manner.