homepersonal finance News

Union Budget 2019: FM Piyush Goyal announces Rs 5 lakh tax rebate under section 87A, but it may be challenging to implement

Union Budget 2019: FM Piyush Goyal announces Rs 5 lakh tax rebate under section 87A, but it may be challenging to implement

Union Budget 2019: FM Piyush Goyal announces Rs 5 lakh tax rebate under section 87A, but it may be challenging to implement
Profile image

By Archit Gupta  Feb 2, 2019 8:52:23 AM IST (Updated)

The salaried class, as well as pensioners, can rejoice as the government increased standard deduction to Rs 50,000 from Rs 40,000.

In a very welcome move, interim finance minister Piyush Goyal reduced tax outgo to zero for those with income upto Rs 5 lakh. It means those with income upto Rs 5 lakh will not pay any tax.

Recommended Articles

View All

However, this is not an increase in the minimum exemption limit, which stays at Rs 2.5 lakh. Those with income exceeding Rs 5 lakh will have to pay 5 percent tax on income between Rs 2.5 lakh and Rs 5 lakh. Taxpayers with total income not in excess of Rs 5 lakh will be offered a rebate of zero tax via section 87A.
The Rs 5 lakh tax rebate under section 87A may be challenging to implement. Most taxpayers can claim this rebate while filing their tax return, since only at that, they will know exactly how much total income they have earned and the section 80 deductions they are actually claiming to become eligible for this rebate.
The salaried class, as well as pensioners, can rejoice as the government increased standard deduction to Rs 50,000 from Rs 40,000. It is applicable to pensioners.
Individuals can now own two house properties and not pay tax on notional rent on the second house, as was the case earlier. This will benefit a large number of home owners who have two houses, and will give some boost to the real estate sector. However, if the second house is rented, such rental income continues to be taxable.
While TDS limit for interest earned from bank deposits is raised to Rs 40,000, such interest is still taxable and taxpayers will have to ensure timely submission of Form 15G to prevent TDS deduction if their total income is below taxable limit.
From earlier restriction of one house property allowed to be purchased against the sale of one, an individual can now purchase two house properties, where capital gains is within Rs 2 crores. Allowed only once in a lifetime, this is a welcome move for those who want to split their capital gains investment into buying two house properties.
Archit Gupta is founder and CEO of ClearTax.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!

Top Budget Opinions

    Most Read

    Market Movers

    View All
    Top GainersTop Losers
    CurrencyCommodities
    CompanyPriceChng%Chng