Union Minister Piyush Goyal in his interim budget for FY 2019-20 announced some revolutionary rules regarding payment of tax and eligible deductions for individuals and others. FinanceShed has analyzed the Income Tax rules 2019 and its impact in the coming period.
Income Tax Slab rates
The basic change done in Income Tax rules 2019 is the change in slab rates for paying tax. This budget proposes a full tax rebate for individuals with an annual income up to Rs. 5 lakh. The individuals having annual taxable income up to Rs. 5 lakh will not have to pay any tax. In other words, the person having gross annual income having Rs. 6.50 lakh will not be liable to pay any tax as a deduction of Rs. 1.50 lakh is allowable under the head 80C and many others. Also, an additional deduction is available for interest payments done on home loan up to Rs. 2 lakh. Where the income is more than Rs. 50 lakhs and less than ₹ 1 crore, the surcharge is applied at a rate of 10% of the income tax and for the income, more than ₹ 1 crore, the surcharge of 15% is applicable on income tax. The slab rates for individuals and NROs are as follows:
|Income Threshold||Tax Rate|
|Up to Rs. 2,50,000||Nil|
|Rs. 2,50,000 to Rs. 5,00,000||5%|
|Rs. 5,00,000 to Rs. 10,00,000||20%|
|Above Rs. 10,00,000||30%|
Hike in Standard Deduction
The government also proposed a lift in standard deduction limit where employees and pensioners are given a flat relief from taxable income – from Rs. 40,000 in a year to Rs. 50,000. Which means that flat deduction of Rs. 50,000 is allowable in taxable income for the pensioners.
Changes in Tax Deducted at Source
In Tax deducted at source, there are number of changes proposed in budget 2019 and changes in rules are done by increasing threshold limit. Under section 194A (Interest other than interest on securities) the basic allowable limit is increased to Rs. 40,000 from Rs. 10,000. This is a revolutionary step for savings done by senior citizens and depositors having small savings deposits. Also in India, people believe in savings rather than expenses thus this change is also beneficial to small investors and non-working spouse.
Unser Section 194I (TDS on Rent) the threshold limit for TDS on rent is increased yearly to Rs. 2,40,000 form Rs. 1,80,000 which means that the earnings from rental have great benefits. This limit is applicable to those other than individual and Hindu Undivided Family (HUF). The government also proposed in the interim budget that house owners are allowed to claim the second property as self-occupied which was not allowed till now.
Also one of the changes proposed is of faster processing o Income Tax return which is only within 24 hours. Also, the assessment of income tax returns will be done online within the next two years.
All in all, it is seen from the changes taken place as Income Tax rules 2019 that the government is aiming at benefiting the middle class and honest taxpayers. Also, they are aiming to bring economic stability with this great move through the interim budget.