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Interim finance minister Piyush Goyal has presented its first ever budget and as expected came out with the much-needed goodies for the middle class tax payers. The budget has proposed the individual tax rebate limit to extend to Rs 5 lakh, which means you do not need to pay any income tax if you earn up to Rs 5 lakh. So, the taxpayers earning income up to Rs 5 lakh will get full tax rebate under section 87A
Interim finance minister Piyush Goyal has presented its first ever budget and as expected came out with the much-needed goodies for the middle class tax payers.
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Let’s see some of the major benefits as announced in the budget impacting your income tax payments in the coming financial year.
Tax Rebate Up To Rs 5 lakh
The budget has proposed the individual tax rebate limit to extend to Rs 5 lakh, which means you do not need to pay any income tax if you earn up to Rs 5 lakh. So, the taxpayers earning income up to Rs 5 lakh will get full tax rebate under section 87A. What it means is that the taxpayers with a net taxable income of up to Rs 5 lakh do not need to pay any taxes. But, all the others who are earning a net taxable income above Rs 5 lakh will only get the standard deduction benefit and not the benefit of this enhanced rebate. Please note, this is a tax rebate and not a tax slab change, which means it will not affect people with higher income say above Rs 10 lakh. But people earning less than Rs 10 lakh can get the benefit if they club it with their other investments say Rs 1.5 lakh under section 80C, home loan interest benefit, interest on education loan, standard deduction, donations made u/s 80G etc.
So for example, if you are earning say Rs 9 lakh a year and have invested fully u/s 80C for Rs 1.5 lakh and also have a home loan interest of Rs 2 lakh, then your net taxable income will be Rs 5 lakh after reducing Rs 50,000 towards standard deduction, Rs 1.5 lakh u/s 80C and Rs 2 lakh towards home loan interest u/s 24B, thereby you will be eligible to claim this rebate hence go completely tax free.
Hike In The Standard Tax Deduction Limit For Salaried Persons
Last budget has brought back the standard deduction for salaried taxpayers with a limit of Rs 40,000 against the earlier medical bills reimbursement and transport allowance. The said limit is increased by Rs 10,000/- to Rs 50,000/-.
TDS Limit u/s 194A on Interest Is Increased
The tax deducted at source (TDS) on the interest income from your bank deposits or post office savings deposits has been raised to Rs 40,000 form the existing Rs 10,000 and it will be a relief for those taxpayers who have invested in the bank fixed deposits or post office deposit schemes. But please do note that this is not a tax exemption meaning, you still have to pay tax on the entire interest income you earn out of your fixed deposits and post office deposits. This is just a hike in the tax deducted by the banks or post office, which they won’t be deducting up to Rs 40,000 interest income thereby saving you from claiming a refund if your total income is less than basic exemption limit.
100% Online Tax Scrutiny
Budget has also proposed that in the next two years, all the tax scrutiny will be done electronically only without involving human interface means, no need to meet the tax official.
Tax Refunds in 24 hours
Soon your income tax returns will be processed in only 24 hours and the refunds will be issued simultaneously.
Hike in Gratuity Limit:
The gratuity limit is also increased by Rs 20 lakh from the existing Rs 10 lakh limit.
Capital Gain Investment Can Be Done In Two Houses u/s 54
Now, capital gains reinvestment under section 54 is extended for buying two residential properties from the current limit of one residential house. It means if you sale a residential property in the next financial year, then you will be eligible to claim exemption under Section 54 for investment in two properties.
No Notional Rent on Your Second House:
Budget has also announced benefit for those who own multiple houses, now they don’t have to pay any notional tax on their second house meaning, if their second house is not let out, then unlike till now they are supposed to pay a notional rent which is done away with.
First Published: Feb 1, 2019 2:10 PM IST