As the Indian Government announced the Budget for the FY, many changes have been proposed that can alter the budgets of a common man’s household. However, most law-abiding, income-earning, and tax-paying citizens are more interested in the new changes made to the income tax provisions. Let’s begin with a quick recap of the income tax-related announcements in the Interim Budget 2019.
- The taxable income slab was proposed to be raised from 2.5 lakhs to 5 lakhs.
- The TDS threshold on interests on bank and post office deposits was proposed to be raised from Rs. 10,000 to Rs. 40,000.
- The TDS threshold on rental income was to increase to Rs. 2.4 lakhs from Rs. 1.8 lakhs.
- The standard tax deduction was proposed to be raised from Rs 40,000 in 2018 to Rs. 50,000 this year.
- Individuals occupying their second self-owned house were to be exempt from paying property tax for that property.
- The workers earning up to Rs. 21,000 per month were proposed to be considered for bonuses.
The Interim Budget 2019, announced in February 2019, had given high hopes to the Indian populace with a proposal of granting full tax rebate after all deductions to individuals earning up to Rs. 5 lakhs per annum. A large portion of young working professionals fall within this income bracket, and many had heaved a huge sigh of relief. Union Minister for Finance, Smt. Nirmala Sitharaman, in her maiden budget, confirmed that the income tax slab rates proposed by Mr. Piyush Goyal in February would be kept unchanged. While the common man rejoices, there’s some bad news for the affluent section of the Indian population. The Hon’ble Finance Minister announced a bunch of new income tax proposals that could impact many taxpayers.
- PAN and Aadhaar would be made interchangeable for tax-filing purposes, which means that if you can file your ITR using your Aadhaar, even without a PAN card.
- Having ruled out the confusion of PAN-Aadhaar linking, the new Budget has made it compulsory for all income-earning citizens to file their tax returns.
- An additional income tax deduction of ₹1.5 lakh would be applicable on home loans for affordable houses that are priced below ₹45 lakh. This benefit would be available for home loans taken until March 2020.
- Another ₹1.5 lakh income tax deduction would be applicable on interest paid on loans for the purchase of electric vehicles.
- 2% TDS would be deducted on all cash withdrawals on amounts exceeding ₹1 crore in a year.
- Retail investments in Central Public Sector Enterprises (CPSE) ETFs could get income tax benefits similar to that of ELSS. A divestment target of ₹1.05 lakh crore has been set for this year. Currently, investments made in ELSS mutual funds that come with a lock-in period of three years are eligible for a deduction of up to ₹1.50 lakh under Section 80C of the Income Tax Act. A similar facility could be available to retail investors in CPSE ETFs.
- The income tax surcharge has been modified for High Net-worth Individuals (HNI) earning more than ₹2 crore a year. HNIs with an earning between ₹2-5 crore would now have to shell out more, with the surcharge rate increased from 15% to 25%. Earnings above ₹5 crore would attract a surcharge of 37% from the current 15%.
Apart from the changes in the income tax provisions, some other announcements have become the talk of the town since this morning. While changes in customs duties of a handful of goods have created a buzz in the media, several incentives have also been introduced that would reduce the prices of a handful of items. Let’s check out what will become more affordable and what would cost a bomb.
What Will Become More Expensive?
- Petrol & diesel
- Metal fittings
- Marble Slabs
- Imported gold and precious metals
- Imported paper and paper products (including printed books)
- Imported electronics like loud-speakers, plugs, sockets, switches
- Imported Vinyl flooring, tiles,
- The indoor & outdoor units of split AC
- Imported cashew kernels
- Imported auto parts
- CCTV cameras/ IP cameras
- Polyvinyl chloride (PVC) pipes
What Will Become Cheaper?
- Electric vehicles
- Imported defense equipment
- Imported parts of electric vehicles
- Imported raw material for the manufacture of artificial kidneys
While some of these announcements brought tears to the eyes of a few, several other announcements in Budget 2019 has rekindled a joyous smile on the faces of many. Click here for the general highlights of the Budget.