This time there are no major announcements in the Union Budget 2019. Reason being the pending tenure of this Govt. is only of three months and so it is fair that the next elected Govt. should propose the full budget and this Govt. should propose only interim budget.
Major announcements of the Union Budget 2019 are as below:
No Income Tax for resident individuals for an Income up to Rs. 5 Lacs
With the announcement in the Union Budget 2019, there will be no income tax for resident Individuals for an income up to Rs. 5,00,000/-.
Kindly note that the Govt. has not expanded the basic exemption limit. It has widened the limit under Section 87A of the Income Tax Act, (Herein after referred to as ‘the Act’) for those individuals whose income is less than or equal to Rs. 5 Lacs.
The effect of the same will be following:
- The Basic Exemption Limit remains the same i.e. Rs. 2.50 Lacs for individuals, Rs. 3.00 for senior citizens and Rs. 5.00 Lacs for super senior citizens.
- Any resident individual having income exceeding the basic exemption limit (i.e. Rs. 2.50 Lacs and Rs. 3.00 Lacs as prescribed above) need to file their Income Tax Return.
- On Income from Rs. 2.50 Lacs to Rs. 5.00 Lacs, tax would be Rs. 12500/- which is not required to pay by availing Rebate u/s 87A of the Income Tax Act.
- If your income is more than Rs. 5 Lacs, you are not entitled for above benefit also.
- As the benefit has been given by way of Rebate u/s 87A, it would be limited to resident individuals only and not to any other person.
Increase in limit of Standard Deduction for Salaried and Pensioners:
In the Union Budget 2018, the Hon’ble Finance Minister has introduced a Standard Deduction of Rs. 40,000/- under Section 16 of the Act for the persons who have the income under the head ‘Salary’.
In the Union Budget 2019, the limit of Rs. 40,000/- has been increased to Rs. 50,000/-.
Deemed Let out income for individuals having more than ‘one’ residential house changed to ‘two’ residential house:
As per Section 23 of the Act, if a person owns more than one residential house and the other residential house is not given on rent then also tax was required to be paid considering any one house as the deemed let out i.e. tax on notional income.
This was really a ridiculous clause because a person may possess one more house for staying of parents, for education of children, for job purpose etc. His reason may be genuine but he needs to pay tax on one of the house treating the same as if it has been given on rent.
This difficulty was realised by the Hon’ble Finance Minister and stating the above announced that there will be no deeming function for two residential houses.
However, a person will still be eligible to claim interest under the house property head u/s 24 of the Act for both the houses.
The limit as specified u/s 24 should be counted as an aggregate Rs. 2 Lacs.
Capital Gain investment scope extended u/s 54 of the Act.
Presently, out of capital gain, you can purchase only one residential house to qualify for Section 54 capital gain exemption.
However, now in the Section 54 of the Act, a proviso is added that if the capital gain amount does not exceed Rs. 2 Crore then the assesse, may at his option, purchase of construct two residential houses in India.
However, this option can be exercised once only in the life time.
Section 80-IBA – Extension for time limit for affordable housing project
The project approval deadline has been increased to March 2020 from present deadline of March 2019.
Changes in TDS:
There are major two changes brought in TDS matter:
- For Interest from Bank and Post Office in excess of Rs. 10,000, TDS was required to be deducted by Bank and Post Office.
Now the limit for TDS deduction has been increased to Rs. 40,000 from existing Rs. 10,000/-.
Kindly note that the limit has been increased only for TDS deduction. There will not be any exemption from tax.
2. For rent paid by businessman in excess of Rs. 1.80 Lacs in a year, TDS was required to be deducted u/s 194I of the Act.
Now the limit for TDS deduction has been increased to Rs. 2,40,000 from existing Rs. 1,80,000/-.
- The other amendments were made in the Indian Stamps Act, 1899 and in Prevention of Money Laundering Act, 2002.