In Budget 2019, the finance minister of India Mr. Piyush Goyal has introduced many changes in income tax rule for the financial year 2019-20. The major highlights of budget 2019 that have grabbed the eyes are full income tax exemption up to Rs.5 lakh on personal income and a hike of 25% on the standard deduction threshold.
As per Mr. Goyal, the budget of 2019 is a vehicle for developmental transformation of India. As a major relief for middle-class taxpayers of India, let’s take a look at the 5 changes that have been introduced in the income tax slab on the personal tax front.
- The tax exemption under Section 87A of Income Tax Act 1961, has been increased to Rs.12, 500. However, this tax rebate is applicable only for that individual whose net taxable income is up to Rs.5 Lakh. Therefore, in the next financial year, if an individual has a net taxable income up to Rs.5 lakh then h/s is eligible to claim the entire taxable income as a tax Moreover, according to the changes made in income tax slab 2019, if the individual has a gross total income of Rs.6.5 lakh and if he/she has made an investment of 1.5 lakh under Section 80C of Income Tax Act then the person’s net taxable income will be Rs.5 lakh and the tax liability will be Rs.12,500, excluding cess.
- The standard deduction has been increased from Rs.40,000-Rs.50,000. The standard deduction reduces the taxable income of the individual, thus it reduces the tax liability as well. In the year 2018 the standard deduction where reintroduced in the income tax slab. With the increase of Rs.10,000 in standard deduction an individual can save up to Rs.3,000 on taxes in 30% tax bracket. The increase in tax rebate of up to Rs.5 lakh has been offered in form of tax exemption and will be beneficial for resident taxpayers with a total income of Rs.5 lakh.
|Net Income After 80C Deduction||Tax||Benefits|
|AY 2019-20||AY 2020-21||AY 2019-20||AY 2020-21|
|Net Income||Increase in Standard Deduction||Net Income|
- In budget 2019, the finance minister has also introduced tax exemption from national rent in case of 2 self-occupied house properties. At present, if an individual has two properties which are self-occupied then the estimated rent from one house property is taxable.
- In the new income tax slab, the capital gain exemption of one-time benefit has been extended on reinvestment in two house properties. This tax benefit is applicable in case the capital gains are Rs.2crore or less. Presently, the exemption in capital gain is only applicable to one house property. The government is mainly focusing on providing tax sops in the sector of real estate so that one can cover the benefit of both under capital gain and head house property.
- The TDS limit on interest from post office deposits or bank has been increased from the current limit of Rs.10, 000- Rs.40, 000. This means interest income on post office/bank deposits up to Rs.40,000 is not subject to tax deducted at source(TDS).
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As this year budget has come up as a relief for a middle-income group of taxpayers, the government has also simplified the tax interface. It will eventually help the government to increase the collection as well as the taxpayers to file an income tax return in a much simplified and easier manner.