February 4, 2019
CHENNAI: With a slew of proposals for the salaried middle class the 2019 interim budget has managed to raise the political dividends of the ruling NDA ahead of the Lok Sabha elections. Nonetheless, the proposed tax reforms are a huge relief for the salaried class of over 3 crore people who shall now enjoy much more spending power.
Those with incomes up to Rs. 5 lakh shall not be required to pay any tax, as against the limit of Rs. 3.5 lakhs earlier. In addition to that, an income of Rs. 6.5 lakhs can be made tax-exempt if they invest Rs. 1.5 lakh in prescribed PF’s like National Pension Scheme (NPS), Public Provident Fund (PPF), etc under Section 80 of the Income Tax Act.
The government has also raised the limit for standard tax deduction to Rs. 50,000 from the earlier Rs.40,000. This shall enable taxpayers to claim an extra Rs.10,000 from the net taxable income. Not only that, the budget proposes to waive Tax Deduction at Source (TDS) for those who have rented out a flat to companies or enterprises, if the rent is less than Rs. 2.4 lakhs as against the earlier threshold of Rs. 1.8 lakhs. This gives relief to those who depend on rental income. Additionally, the budget also allows to waive TDS for interest income in post offices and banks on incomes up to Rs. 40,000.
The 2019 budget particularly gives an impetus to the real estate which had been sluggish in the recent months. The FM has allowed exemption of capital gains of up to Rs. 2 crore from the tax net if the income from the sale of a residential house is invested in two residential houses, instead of one as is currently prescribed by the Income – Tax Act. The aforesaid exemption is available to a taxpayer once in a lifetime and only applicable when capital gains are below Rs. 2 Crores.
The NDA government has also proposed to make the cumbersome process of filing tax returns easier with the introduction of 24 hours online tax return filing. Earlier this month, the Prime Minister had also approved a sanction of Rs. 4,241.97 crore for I-T major Infosys to develop Integrated E-filing and Centralised Processing Centre 2.0 Project of the Income Tax Department by 2020.
The aforesaid measures are much needed and place a tight grip on the political leanings of the middle class taxpayers ahead of the general election. What needs to be examined is how these policies shall be implemented and which proposals shall make it to the final budget of July 2019.
Compiled by HARSHITA MISHRA