The government in its interim Budget 2019 has brought relief to the middle class salaried taxpayers. Some of the key proposals made by the finance minister are listed below-

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The government has increased the limit of the available tax rebate from Rs 2,500 to Rs 12,500, which would benefit resident taxpayers having taxable annual income up to Rs 5 lakh. This would mean that even individuals having gross income up to Rs 6.5 lakh need not pay tax, provided they have exhausted their investment limits in various tax saving instruments. Based on other deductions, individuals having even higher gross income may also end up paying no tax.

Last year’s budget reintroduced the benefit of standard deduction of Rs 40,000 to salaried individuals. The government has now increased this deduction limit to Rs 50,000. This would result in further tax savings for salaried tax payers.

Individuals having two self-occupied house properties in India will no longer pay tax on notional rent on second self -occupied property. However, the overall deduction limit on housing loan interest remains unchanged at Rs 2 lakh.

The threshold of tax deduction at source on interest from bank/post office deposits has been increased from Rs 10,000 to Rs 40,000. This would provide relief to small depositors and non-working spouses who keep their savings in various deposits with banks/post office.

As a onetime opportunity for the taxpayers, benefit of rollover of capital gain exemption extended to investment in two residential house properties, where the capital gain is up to Rs 2 crore from the sale of residential house property. This shall not only provide tax savings to individuals, but also boost the investments in the real estate sector.

To simplify and accelerate the verification/assessment of tax returns, it is proposed to digitalise the processes through anonymised back office, manned by tax experts and officials, without any personal interface between tax payers and tax officers.

Given that this was the interim budget before general elections, it has extended benefits to varied class of taxpayers.

Amarpal S. Chadha is tax partner and India mobility leader, EY. The article has inputs from Shanmuga Prasad, director, EY.

First Published:Feb 1, 2019 6:31 PM IST