Annual income up to Rs.5 lakhs will get full tax rebate
Press Information Bureau
Government of India
Ministry of Finance
Government of India
Ministry of Finance
01-February-2019
Income upto Rs 5 Lakh to get full tax rebate; higher standard deduction proposed
Relief of over Rs 23,000 crore to
estimated 3 Crore small and middle class tax-payers TDS threshhold on
interests on small savings raised Boost to housing and real estate
sector FM announces a slew of tax reliefs for middle class and small tax
payers
Individual taxpayers having taxable
annual income up to Rs.5 lakhs will get full tax rebate and therefore
will not be required to pay any income tax. While presenting the Interim
Budget 2019-20 in Parliament today the Union Minister for Finance,
Corporate Affairs, Railways & Coal, Shri Piyush Goyal said “Because
of major tax reforms undertaken by us during last four and half years,
both tax collections as well as tax base have shown significant
increase, achieving a moderate taxation- high compliance regime. It is,
therefore, just and fair that some benefits from the tax reforms must
also be passed on to the middle class taxpayers”
As a result, the Finance Minister added
that even persons having gross income up to Rs. 6.50 lakhs may not be
required to pay any income tax if they make investments in provident
funds, specified savings, insurance etc. In fact, with additional
deductions such as interest on home loan up to Rs.2 lakh, interest on
education loans, National Pension
Scheme contributions, medical insurance, medical expenditure on senior
citizens etc, persons having even higher income will not have to pay any
tax. This will provide tax benefit of Rs.18,500 crore to an estimated 3
crore middle class taxpayers comprising self employed, small business,
small traders, salary earners, pensioners and senior citizens.
STANDARD DEDUCTIONS RAISED
For salaried persons, Standard Deduction
is being raised from the current Rs.40,000 to Rs.50,000. “This will
provide additional tax benefit of Rs.4,700 crore to more than 3 crore
salary earners and pensioners”, the Finance Minister informed.
TDS THRESHHOLD INCREASED
Tax Deduction at Source (TDS) threshold
on interest earned on bank/post office deposits has been proposed to be
raised from Rs.10,000 to Rs.40,000. Shri Goyal said, “This will benefit
small depositors and non-working spouses”. Further, the TDS threshold
for deduction of tax on rent has also been proposed to be increased from
Rs.1,80,000 to Rs.2,40,000 for providing relief to small taxpayers.
MORE RELIEF TO RESIDENTIAL HOUSES
It has been proposed to exempt the levy
of income tax on notional rent on a second self-occupied house.
Currently, income tax on notional rent is payable if one has more than
one self-occupied house. Shri Goyal announced the relief considering the
difficulty of the middle class having to maintain families at two
locations on account of their job, children’s education, care of parents
etc.
Further, the Finance Minister proposed
to increase the benefit of rollover of capital gains under Section 54 of
the Income Tax Act from investment in one residential house to two
residential houses for a taxpayer having capital gains up to Rs. 2
crore. This benefit can be availed once in a life time. For making more
homes available under affordable housing, the benefits under Section
80-IBA of the Income Tax Act is being extended for one more year, i.e.,
to the housing projects approved till 31st March, 2020. Also, for giving
impetus to the real estate sector, the Finance Minister proposed to
extend the period of exemption from levy of tax on notional rent, on
unsold inventories, from one year to two years, from the end of the year
in which the project is completed.
Source: PIB