Tax relief for the middle class was one of the highlights of Finance Minister Piyush Goyal’s Budget 2019 speech.
Proposing several changes to the tax structure, Piyush Goyal – presenting the NDA government’s last budget in an election year – proposed no tax on income up to Rs 5 lakh.
Currently, income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5 and Rs 5 lakh invites 5 per cent tax, while that between Rs 5 lakh and Rs 10 lakh is taxed at 20 per cent. Income above Rs 10 lakh is taxed at 30 per cent.
Here are six highlights of the changes in personal tax structure:
* Income up to Rs 5 lakh to get full tax rebate. So in next fiscal, if an assessee has net taxable income of up to Rs 5 lakh in the financial year, he/she is allowed to claim the entire tax payable as tax rebate.
*Individuals with gross income up to Rs 6.5 lakh will not need to pay any tax if they make investments in provident funds and prescribed equities.
* Standard deduction, which reduces your taxable income thereby reducing your tax liability, has been increased from Rs 40,000 to Rs 50000.
* TDS threshold on rental income raised from Rs 1, 80,000 to Rs 2, 40, 000 lakh.
* TDS slab on interest on bank, post office deposits raised from Rs 10,000 to Rs 40,000. This means interest income on bank/post office deposits up to Rs 40,000 will not be subject to TDS.
* Exemption on levy of income tax on notional rent on a second self-occupied house is also now proposed. Currently, income tax on notional rent is payable if one has more than one self-occupied house.