Interim Budget 2019 and the Common Man: Five Takeaways
Updated: Aug 20, 2021
The tax proposals made in the Interim Budget 2019 had stirred a lot of positive emotions for the individual taxpayers 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 taxpayers.
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/-. This 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 groups and retirees who park their funds in post offices 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 the sale of house property has now been extended to second house property. Provided the capital gains are 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 of 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 within 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 groups is going to translate to more cash in the hands to spend leading to the increased purchasing power of the low-income groups. This will further have an incremental effect on economic activity which will be good in terms of GDP growth for the country.