In the interim Budget 2019-20 speech, the acting finance minister Piyush Goyal has provided a full tax rebate on income upto Rs. 5 lakhs. The measure is supposed to cheer the middle-class of taxpayers by providing them much needed tax relief.
Impact of Budget 2019 Full Tax Rebate
As of AY 2019-20, the tax rebate limit under section 87A was of Rs. 2,500 for net taxable income upto Rs. 3.5 lakhs. The full tax rebate on net taxable income of up to Rs. 5 lakh effectively increases this tax rebate to Rs.12,500 annually. Further, the income tax deduction limit under Section 80C has been kept unchanged at Rs. 1.50 lakh which means taxpayers will effectively pay no tax for income upto Rs. 6.50 lakh provided they have invested in saving instruments eligible under Section 80C such as PPF, ELSS mutual funds, ULIPs, etc.
Interim Budget 2019 Increase in Standard Deduction
In the Interim Budget 2019 speech, an increase in the standard deduction limit for the salaried individuals from Rs. 40,000 to Rs. 50,000 annually was also announced. This change will impact the tax outgo of all salaried individuals irrespective of how much they earn.
Higher TDS Threshold on Bank and Post Office Deposits
The TDS threshold limit on interest earned from bank and post-office deposits has also been increased from Rs. 10,000 to Rs. 40,000. This means there will be fewer bank or post office deposit holders filing for an income tax refund in lieu of bank/post office interest TDS in AY 2020-21. Also, the threshold limit for TDS on annual rent has been increased from Rs. 1.80 Lakh to Rs. 2,40,000. Know more about benefits to real estate investors in Interim Budget 2019
What Didn’t Change for Taxpayers in Interim Budget 2019-20
Apart from keeping the existing 80C benefit at Rs. 1.5 lakh, Interim Budget 2019 speech also kept income tax slabs and applicable slab rates unchanged. Therefore, individuals having net annual taxable income greater than Rs. 5 lakh will have the same tax treatment as before. It is estimated that these interim budget announcements will provide tax benefits to the tune of Rs.18,500 crore for an estimated 3 crore, middle-class taxpayers.