Interim Budget 2019 – Proposed Changes in the Income Tax Laws
Budget 2019 – Expectations of a Common Man
January 23, 2019
To Do List for a Solid Financial Year Endgame
March 26, 2019

Interim Budget 2019 – Proposed Changes in the Income Tax laws

The Government of India announced the Interim Budget on February 1, 2019. This is the current Government’s last budget before Lok Sabha elections. As a result, the Government has left no stone unturned to please the public.

Through the budget, the Government has proposed several tax-friendly amendments for the masses. If the changes get approved, they will take effect from FY 2019-20. Here are the proposed key changes in the Income Tax laws which can help you save more tax this year.

1. Increase in Rebate u/s 87A

If you are a resident individual, you get a tax benefit in the form of a rebate of Rs 2,500 if your income is up to Rs 3,50,000. However, this year you can save more because the Government wants to raise the amount of rebate to Rs 12,500 and extend it to those earning up to Rs 5,00,000. The following table explains how it will impact different income classes.

Resident Individual
Taxable Income (in Rs)Tax Liability (Pre-budget) (in Rs)Tax Liability (Post-budget) (in Rs)
2,50,000NilNil
3,50,0002,500Nil
5,00,00012,500Nil
6,00,00032,50032,500
10,00,0001,12,5001,12,500
Note: The table above does not account for Health & Education Cess.

 

2. Increase in Standard Deduction

The Government replaced Conveyance Allowance and Medical Reimbursement with  Standard Deduction of Rs 40,000 in the Union Budget – 2018 to give you higher tax benefits. This year, you can pocket more money because the Government wants to increase the benefit to Rs 50,000.

3. Increase in TDS on Rent

If you are required to deduct TDS from your outgoing rental payments u/s 194-I, you will be relieved to know this.

The Government has proposed to increase the threshold for deduction of tax from Rs 1,80,000 to Rs 2,40,000 to ease your compliance load.

4. Increase in Limit of Tax Deduction on Interest from Deposits

The Income Tax laws make it mandatory for banks, co-operative societies and post offices to deduct tax from the interest they pay you on your deposits other than saving deposits. This law applies if the interest amount is Rs 10,000 or higher.

Now you can deposit more money without worrying about TDS as the Government wants to increase this limit to Rs 40,000. You can understand it better through the table given below:

 

Payer

Threshold limit (in Rs) if Payee is
Senior CitizenOthers
Banking Company50,00040,000
Co-operative society engaged in the banking business50,00040,000
Post office50,00040,000
In any other case5,0005,000

 

5. Increase in Tax Exemption on Capital Gains

If you invest your income from the sale of house property in buying or constructing another house property, you get tax exemption u/s 54. Currently, you are only allowed to invest in one residential house.

Fortunately, this year you can save more tax because the Government has proposed to allow investment of aforesaid income in two residential houses to get tax exemption. However, your capital gain should not be more than Rs 2 crore. Also, you can avail the benefit of investment in two properties only once in your lifetime.

6. Increase in Time Limit for Approval of Housing Project u/s 80-IBA

As a business involved in the affordable housing project, you get deduction u/s 80-IBA on your profits and gains from the business. However, such a project shall be approved by March 31, 2019.

Much to your relief, the Government has proposed to extend this timeline by one year i.e., till March 31, 2020.

7. Two Self-occupied properties – No Deemed Rental Income

The current income Tax laws say that if you own more than one house property, you can show one as a self-occupied one while the other is considered as a let out. The annual value of the self-occupied property is deemed as ‘nil’. But, the additional properties are deemed as let out u/s 23. The notional rental income from such properties is taxed as “Income from House Property”.

Through Interim Union Budget, 2019, the Government has proposed to allow the taxpayers to declare two houses as self-occupied and claim ‘nil’ annual value on them. Hence, you can claim a deduction on interest paid on loans taken for both properties. The only catch here is that the Government has capped the maximum deduction for interest on housing loans for both the self-occupied houses put together to Rs 2 lakh only.

8. Centralised and Simplified Stamp Duty Collection

The government has also proposed to simplify and centralise the stamp duty collection process for listed securities at a unified rate.

So, from the next financial year, stock exchanges will collect the stamp duty for trading stocks at a unified rate and deposit the proceeds with the central government, which in turn will divide it among the states.

9. Increase in the Period of Investigation under PMLA

The Government also wants to extend the period of investigation from 90 to 365 days under the Prevention of Money-laundering Act, 2002. During this period, the attachment will remain valid. Also, in the calculation of the period of 365 days, the time frame during which the investigation is stayed by any court will be excluded.

I think that the proposed budget might be interim but is definitely a blockbuster for the common man. We need to wait for a few months to see these changes become a reality through the Finance Act, 2019.

How can H&R Block help you?

Saving taxes and filing income tax return accurately becomes very easy when you have professional help. This is where we come into the picture. You can either use our intuitive tax filing platform to easily file your tax return or let our tax experts file it for you. We have a team of in-house tax experts who can accurately file your tax returns online while giving you maximum tax benefits.

Do you think that it is a common man’s budget? Let us know in the comments below.

Leave a Rating!
4.3 (3 Votes)
Niteesh Singh
Niteesh Singh
Niteesh is a Tax Researcher and Content Lead at H&R Block (India). He holds an MBA with a specialisation in BFSI domain. In his career spanning over six years, he has helped thousands of people understand taxes in a simple and effective manner. Outside work, Niteesh is an astronomy geek who is also involved in wildlife conservation activities.