The Union Budget sets the stage for the coming financial year. While it has numerous announcements related to various sectors of the economy, Value Research specifically filters out those that have an impact on your savings and investments. The interim Budget 2019 is a vote on account. Nevertheless, it has some far-reaching proposals. Here they are.
Tax rebate for income up to Rs 5 lakh
The interim Budget has announced a tax rebate for those whose incomes are up to Rs 5 lakh. If you are also excited by this, wait a minute. There is a catch in this announcement. The key word here is 'rebate'. It's not an exemption. If you thought that the announcement means that you don't have to pay any tax on incomes up to Rs 5 lakh, you have also been bowled over by the FM's googly.
It's the rebate under Section 87A that has been increased to Rs 12,500. Any individual with a taxable income of up to Rs 3.5 lakh was earlier allowed a rebate of Rs 2,500 on taxes under this section. It has been proposed that full rebate of Rs 12,500 will be provided to a resident individual with a taxable income of up to Rs 5 lakh.
So, there are no changes in the tax slab or the basic exemption limit.
Fortunately, standard deduction has been raised from Rs 40,000 to Rs 50,000. And this change is meant for all salaried and pensioners.
TDS threshold raised on interest income
- The threshold for TDS on the interest income from bank and post-office deposits has been raised to Rs 40,000 from Rs 10,000.
- The threshold to deduct tax on rent has been increased to Rs 2.4 lakh fromRs 1.8 lakh.
No tax on two self-occupied properties
The rental income from a property is taxed on a notional basis if the property has been kept vacant or is self-occupied. Earlier the notional rent from one self-occupied property was exempt from taxation. It has now been proposed that two self-occupied properties will be exempt from tax.
Roll-over of capital gains on sale of property now extended to two houses
Section 54 allows you to purchase a residential house using all or part of the long-term capital gains from an immovable property without paying any tax. This benefit has been extended on purchasing two residential properties from the existing limit of just one. This benefit can be availed once in a lifetime, provided the capital gains do not exceed Rs 2 crore.
Other notable changes
A mechanism is being prepared to process income-tax returns within 24 hours and to issue the refunds simultaneously. It may take up to two years for this to be effective. The mechanism is likely to make things a lot simpler and hassle-free for taxpayers.