Budget 2020: No change in Income Tax Slab, Increase in Surcharge, Additional Deduction for Interest paid on loans etc.
Press Information Bureau
Government of India
Ministry of Finance
05-July-2019 13:47 IST
Tax rates for individuals having taxable income from Rs. 2 cr - 5 cr and Rs. 5 cr & above to be increased by around 3 % and 7 % respectively
Direct Tax revenue increases by over 78 % in FY2018-19 from FY 2013-14; rose to Rs. 11.37 lakh crore from Rs. 6.38 lakh crore Relief proposed in Levy of Securities Transaction Tax (STT)
Additional deduction of up to Rs.1.5 lakh for interest paid on loans for purchase of affordable house Additional Income Tax deduction of Rs. 1.5 lakh on interest paid on loans taken to purchase Electric Vehicles
The effective tax rates for the higher income group individuals having
taxable income from Rs. 2 crore to Rs. 5 crore and Rs. 5 crore and
above is proposed to be increased by around 3 percent and 7 percent
respectively. Presenting the General Budget 2019-20 in the Parliament
today, Union Minister of Finance and Corporate Affairs Smt. Nirmala
Sitharaman said, “In view of rising income levels, those in the highest
income bracket need to contribute more to the Nation’s development”.
Thanking the taxpayers, she said that they are playing a major role in
Nation building.
Referring to several measures taken in the past to alleviate the tax
burden on small and medium income earners, the Minister said, “Those
having annual income upto Rs. 5 lakh are not required to pay any income
tax”. This includes self-employed as well as small traders, salary
earners, and senior citizens, she added.
Tax Revenue Up
Due to slew of efforts taken by the Government, the direct tax revenue
has significantly increased by over 78 percent from Rs. 6.38 lakh crore
in Financial Year 2013-14 to around Rs. 11.37 lakh crore in Financial
Year 2018-19. The Minister stated that the increase has been significant
in last couple of years. The Direct Tax revenue grew by 19.13 percent
to Rs. 10, 02, 741 crore in 2017-18 (Rs. 8, 41, 713 crore in 2016-17)
and by 13.46 percent in 2018-19. The number of taxpayers also increased
by approximately 48 percent over the period 2013-14 to 2017-18, from
5.71 crore taxpayers to 8.4 crore taxpayers, due to various initiatives
and taxpayer outreach programmes undertaken by the Government.
Relief in Levy of Securities Transaction Tax (STT)
In her speech, the Finance Minister proposed to give relief in levy of
Securities Transaction Tax by restricting it only to the difference
between settlement and strike price in case of exercise of options.
Additional Deduction of Interest for Affordable Housing
In order to provide a further impetus to affordable housing, the
Minister proposed to allow an additional deduction of up to
Rs.1,50,000/- for interest paid on loans borrowed up to 31st March, 2020
for purchase of an affordable house valued up to Rs. 45 lakh.
Therefore, a person purchasing an affordable house will now get an
enhanced interest deduction up to Rs. 3.5 lakh. This will translate into
a benefit of around Rs.7 lakh to the middle class home-buyers over
their loan period of 15 years.
For realisation of the goal of ‘Housing for All’ and affordable housing,
a tax holiday has already been provided on the profits earned by
developers of affordable housing. Also, interest paid on housing loans
is allowed as a deduction to the extent of Rs. 2 lakh in respect of
self-occupied property.
Promoting Electric Vehicles
To make Electric Vehicles affordable to consumers, the Minister said
that the Government will provide additional income tax deduction of Rs.
1.5 lakh on the interest paid on loans taken to purchase electric
vehicles. This amounts to a benefit of around Rs. 2.5 lakh over the loan
period to the taxpayers who take loans to purchase electric vehicle.
Considering India’s large consumer base, the she stated, “We aim to
leapfrog and envision India as a global hub of manufacturing of
Electric Vehicles. Inclusion of Solar storage batteries and charging
infrastructure in the above scheme will boost our efforts”. The
Government has already moved GST council to lower the GST rate on
electric vehicles from 12% to 5%, she added.
Level Playing Field for Non Banking Financial Companies (NBFCs)
Recognising the increasingly important role of NBFCs in India’s
financial system and to provide level playing field, the Finance
Minister has proposed to tax the interest on bad or doubtful debts in
the year in which it is actually received. Presently this is allowed for
scheduled banks, public financial institutions, state financial
corporations, state industrial investment corporations, cooperative
banks and certain public companies like housing finance companies.
Measures to promote the International Financial Services Centre (IFSC)
To promote IFSC in GIFT City, the Finance Minister proposed to further
provide several direct tax incentives to an IFSC including 100 percent
profit-linked deduction under section 80-LA in any ten-year block within
a fifteen-year period, exemption from dividend distribution tax from
current and accumulated income to companies and mutual funds, exemptions
on capital gain to Category-III AIF and interest payment on loan taken
from non-residents.
Compulsory Filing of Return
The General Budget 2019-20 proposes to make return filing compulsory for
persons, who have deposited more than Rs. 1 crore in a current account
in a year, or who have expended more than Rs. 2 lakh on foreign travel
or more than Rs. 1 lakh on electricity consumption in a year or who
fulfils the prescribed conditions, in order to ensure that persons who
enter into high value transactions also furnish return of income. It is
also proposes to provide that a person whose income becomes lower than
maximum amount not chargeable to tax due to claim of rollover benefit of
capital gains shall also be required to furnish the return.
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