Here’s the insight of what interim budget 2019-20 has in store for you in terms of taxation.
1. Individual taxpayers having Income up to Rs 5 lakh will be exempted from tax payment.
Finance bill 2019 provided much-awaited relief to middle-class taxpayers. Individual taxpayers having taxable Income up to Rs 5 lakh will get a full tax rebate and therefore will not be required to pay any Income-tax. Considering the deduction of Rs.1,50,000/- available u/s 80C, Individuals having a gross total income of Rs 6.5 lakh will not be required to pay any tax. This tax rebate will be available even for higher income if we consider other deductions like home loan interest, education loan interest, medical expenditure etc.
2. Rebate limit under section 87A increased to Rs 5 lakh.
Till FY 2018-19 a resident individual having total income up to Rs.3,50,000 is entitled for a rebate of lower of Rs.2,500 or his tax liability. Finance bill 2019 has extended this rebate to Rs.12,500 for resident individuals having income up to Rs.5,00,000. So from FY 2019-20 individuals having total income up to Rs.5,00,000 will be allowed a rebate of Rs.12,500 or his tax liability whichever is less.
3. Tax-free gratuity limit increased to Rs 30 lakh.
Finance Bill 2019 proposed to increase the tax-free gratuity limit to Rs 30 lakh from the existing limit of Rs 20 lakh.
4. Standard Deduction in salary increased to Rs.50,000.
For salaried taxpayers, Standard Deduction is being raised from the current Rs.40,000 to Rs.50,000. Standard Deduction of Rs.40,000 was introduced in the last budget of 2018 for the financial year 2018-19.
5. No tax on notional rent on 2nd self-occupied house property.
From FY 2019-20 taxpayer having two house properties at two locations are not required to pay tax on notional rent on second self-occupied house property. This is a great relief for those Individuals who maintain families at two locations on account of their job, children's education, care of parents etc.
6. TDS on rent threshold increased.
TDS threshold for deduction of tax on rent is proposed to be increased from Rs.1,80,000 to Rs.2,40,000. So from Financial Year 2019-20, no TDS will be required to be deducted if the rent amount is limited to Rs.2,40,000.
7. TDS deduction threshold increased on interest from bank/post office deposits or savings account.
Threshold limit for the deduction of TDS on interest earned on bank/post office deposits or savings bank account is being raised from Rs.10,000 to Rs.40,000. Relief mostly to those who leave the large amount in banks savings account and banks were deducting TDS on interest over Rs.10,000.
8. Section 54 exemption limit increased on two house properties.
The benefit of investment in residential house property for claiming exemption u/s 54 has been increased to two house properties. Now capital gain up to Rs 2 crore is exempt from tax if an individual invests in two residential house properties.
9. Benefits under section 80 IBA.
Finance bill 2019 has extended the benefit of section 80 IBA to every affordable housing projects approved till 31st March 2020. This is a great step to provide homes to the citizen of the country under affordable housing schemes.