Union Finance Minister Piyush Goyal, in his Budget 2019 speech on Friday announced several tax benefits for the salaried and middle class. The salaried class people or those earning up to Rs 5 lakh are now not required to pay income tax. Also, they will be exempted from additional deductions of up to Rs 2 lakh on interest on homes loans, education loans, etc. The government has also increased TDS threshold on deduction of tax on rent, which will benefit the salaried people. The standard deduction limit has also been increased to Rs 50,000. The centre has also assured of GST benefit for home buyers in the coming year.
Let's look at five big announcements made in the Budget 2019.
The Finance Minister said individual taxpayers having taxable annual income up to Rs 5 lakh will get a full tax rebate. He added means those with gross income up to Rs 6.50 lakh may also not have to pay any income tax if they make investments in provident funds, specified savings, insurance etc. The existing income tax exemption limit is Rs 2.5 lakh, and including tax rebate, no tax is payable on income up to Rs 3 lakh. However, all these tax proposals will be presented in the regular budget, and will only be applicable from the financial year 2019-20.
"The mega tax relief is a noteworthy move as with this, the limit significantly increases from Rs. 2.5 lacs to Rs. 5 lacs. Also, no tax for people earning a gross income of up to Rs. 6.5 lakhs managed with the right kind of investments will give an impetus to life insurance industry as insurance is an important tax saving tool," said Ms. Saba Adil, Chief People and Operating Officer, Aegon Life Insurance
However, there has been no increase in the threshold limit of Rs 2.5 lakh. The government has announced a rebate under Section 87A of the Income Tax Act, which has been hiked to Rs 12,500 from the earlier rebate of Rs 2,500. The eligibility of the total income to avail the benefit has now been increased Rs 5 lakh from the earlier from Rs 3.5 lakh. So, only those whose total income does not exceed Rs 5 lakh will be eligible for the benefit.
The government has announced additional deductions such as interest on home loan up to Rs 2 lakh, interest on education loans, National Pension Scheme contributions, medical insurance, medical expenditure on senior citizens. This will provide a tax benefit of Rs 18,500 crore to over 3 crore middle-class taxpayers, including salaried class, self-employed, small businesses, small traders, pensioners and senior citizens, claimed the government.
The government has increased the TDS threshold for deduction of tax on rent to Rs 2.4 lakh from the current Rs 1.8 lakh, which will provide a big relief to small taxpayers, including salaried class. Also, the benefit of rollover of capital gains under section 54 of the Income Tax Act will be increased from investment in one residential house to two residential houses for those having capital gains up to Rs 2 crore. This benefit, however, can be availed once in a lifetime. Also, the government has done away with 'notional rent' on a second self-occupied house, payable if one has more than one self-occupied house.
For salaried persons, the standard deduction is being raised from the current Rs 40,000 to Rs 50,000, which will give additional tax benefit of Rs 4,700 crore to over 3 crore salary earners and pensioners.
Union Finance Piyush Goyal said the high taxation levied on multiple commodities in the pre-GST regime has been rationalised to a significant extent, which has provided relief of about Rs 80,000 crore annually to consumers, claimed Goyal. He said the government wants to reduce the GST burden for home buyers, and that it has appointed a group of ministers to examine this.