Interim Budget 2019
By MANU NEDUNKANDATHIL
The tax proposals made in the Interim Budget 2019 had stirred a lot of positive emotions for the individual tax payers as soon as they were announced. However, the initial euphoria settled down once the details came out and people understood the effects of the tax proposals on their ultimate tax liability.
However, having said that, there are still some positives from the budget. Here are five takeaways from the tax proposals made in the interim budget for the individual tax payers.
FiveTakeaways
1. Tax rebate limit under section 87A has been increased from present Rs. 3,50,000/- to Rs. 5,00,000/- and maximum tax rebate increased from present Rs. 2,500/- to Rs. 12,500/-. Which implies if one can effectively bring down his taxable income to Rs. 5 lac per annum, his income liability becomes zero.
2. Standard Deduction available to salaried class has been increased from present Rs. 40,000/- to Rs. 50,000/-. A hike of Rs. 10,000/-.
3. TDS limit for interest income from Post Office Savings and Bank Deposits increased from present Rs. 10,000/- to Rs. 40,000/- benefiting a large population of low income group and retirees who park their funds in post office and banks.
4. TDS threshold on rent increased from Rs. 1,80,000/- to Rs. 2,40,000/-.
5. Section 54 exemption on capital gains arising from sale of house property has now been extended to second house property. Provided the capital gains is less than Rs. 2,00,00,000/-. The exemption can only be availed once in a lifetime. Earlier, the exemption on capital gains arising out sale from house property was restricted to Rs. 50,00,000/-.
Being an election year, it was expected of the government to present a pro poor budget. However, the government has done well in limiting its urge to go overboard with unrealistic tax breaks and freebies and thus put pressure on the next government. It has made sure the CAD (Current Account Deficit) is kept well in the desired limit.
In addition, proposals made in terms of yearly direct cash transfer of Rs. 6,000/- to farmers and the tax rebate under section 87A benefiting low income group is going to translate to more cash in the hands to spend leading to increased purchasing power of low income group. This will further have an incremental effect on economic activity which will be good in terms of GDP growth for the country.