Being the last budget of the present government, budget 2019 had been much talked about, especially because of budget 2019 tax policies. All the sections of the society had been looking forward to the changes that the government has to bring in. This budget has included everyone and has been focused on improving the condition of the financial condition of the middle class. There have been amendments in the Income Tax Act 1961 and Goods and Services tax along with changes in many other areas as well.
Budget 2019 tax highlights
With the raising of the standard tax deduction for people who had made investments in savings, which constitute around 90% of the middle-class taxpayers, around 3 crore middle taxpayers will be affected. Also, this budget provides relief to the renting house owners and exemptions raised for self-occupied house property.
Interim Union budget has unveiled by Mr. Piyush Goyal on 1st February, 2019 in Lok Sabha. Various reliefs were expected by general public in Income tax to increase their disposal income such as increase in basic exemption threshold limit, increase in maximum limit of deduction u/s 80C, increase in standard deduction for salaried class persons etc.
This article provides you with an insight into the budget 2019 tax rebate that everyone has been talking about.
Key amendments recommended in Income Tax Act, 1961 are:
Net taxable Income up to INR 5,00,000 will be chargeable to NIL Income tax as deduction u/s 87A has increased from INR 2,500 to INR 12,500 if total income doesn’t exceed INR 5,00,000. (Section 87A of IT Act)
| Impact of amendment | ||
|---|---|---|
| Net Taxable Income | 5,00,000 | 5,10,000 |
| Income Tax: | ||
| Upto INR 2,50,000 | NIL | NIL |
| Above 2,50,000 to 5,00,000 | 12,500 | 12,500 |
| Above 5,00,000 to 10,00,000 | – | 2,000 |
| Above 10,00,000 | – | – |
| Total Tax | 12,500 | 14,500 |
| Less: Rebate u/s 87A | 12,500 | – |
| Net Tax Payable | NIL | 14,500 |
| Add: Cess | NIL | 580 |
| Total Tax payable | NIL | 15,080 |
| Net Saving | 12,500 | NIL |
Standard Deduction under head salary has increased from INR 40,000 to INR 50,000 (Section 16 of IT Act)
- Exemption for self-occupied house property increased from one house to 2 houses. However, deduction for interest under section 24 is limited to INR 2,00,000 for both houses (Section 23 and 24 of IT Act)
- Long term capital gain on transfer of residential house property can be claimed as exempted by making further investment in two residential house properties provided capital gain income is upto INR 2 Crores. Earlier, exemption was available on investment in one residential house only.
Revised threshold limit for deduction of TDS:For the purpose of claiming 100% deduction u/s 80-IBA of profits and gains derived from business of developing and building housing projects, time limit for obtaining approval of housing projects has extended from 31st March, 2019 to 31st March, 2020. (Section 80-IBA of IT Act)
| Section | Nature of Payment | Earlier Threshold Limit | Revised Threshold Limit | Payer |
|---|---|---|---|---|
| 194A | Interest other than “Interest on Securities” | 10,000 | 40,000 | Banking Company
Co-operative society Post Office |
| 194-I | Rent | 180000 | 240000 | Any person, not being an individual or a Hindu undivided family |
Key Amendment and achievements in GST:
- Businesses with less than INR 5 Crores of turnover will be allowed to file quarterly returns. Such taxpayers comprise over 90% of total taxpayers.
- GST rates have continuously reduced over a period of time. Most of the daily use items are taxable @ 0-5% rate.
