Budget 2019 India: To achieve the aforesaid objectives, following are some of the changes which would have an impact on individual taxpayers:
Union Budget 2019 India: Finance Minister Nirmala Sitharaman presented the maiden Budget of the government’s second tenure on Friday. In this Budget, the focus is on rich taxpayers, affordable housing, promoting digital payments and ease of compliance.
To achieve the aforesaid objectives, following are some of the changes which would have an impact on individual taxpayers:
1. High income tax payers earning more than Rs 2 crore per annum will be impacted by the increase in surcharge rate. The surcharge has been increased from the current rate of 15 per cent to 25 per cent on the income slab falling under Rs 2 crore ~ Rs 5 crore; and from the current 15 per cent to 37 per cent on income falling above Rs 5 crore. This would end up increasing the effective tax rate by about 3 per cent and 7 per cent under both the aforementioned slabs, respectively. An important point to highlight here is that in the Interim Budget, middle class and salaried taxpayers benefited on account of additional rebates and increase in standard deduction limit. Thus, the intention the of government is that the high income tax payers should be contributing more towards nation building.
2. Home buyers looking to invest in affordable housing will get an additional income tax deduction up to Rs 1.5 lakh on account of loan availed until March 31, 2020 for purchase of first residential property. The stamp duty value of such house property should not exceed Rs 45 lakh.
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3. For individuals contemplating to purchase electric vehicles, a deduction of Rs 1.5 lakh will be available for interest on loan taken for purchase of the electric vehicle during the period April 1, 2019 to March 31, 2023, provided the individual does not own any other electric vehicle on the sanction of the loan.
4. Pensioners can now look forward to more disposable funds in their hands at the time of exiting the National Pension Scheme (NPS). Presently, 40 per cent of the total amount payable at the time of closure of NPS account or on opting out of the NPS scheme is exempt from tax. It has been proposed to increase this exemption limit from 40 per cent to 60 per cent.
5. To widen the tax base, facilitate compliance and digital payments, some of the changes proposed are:
# Currently, individuals having income below the exemption limit are not required to file the return of income. It has been proposed for mandatory filing of return of income by individuals entering into certain specified high value transactions even if their taxable income is below the exemption limit.
# The inter-changeability of PAN and Aadhaar number has been introduced.
# To discourage the practice of making business payments in cash, a TDS levy of 2 per cent has been introduced on cash withdrawal exceeding Rs 1 crore in a year from a bank account.
Thus, on the one hand, the Budget intends to increase its tax revenue to achieve fiscal targets, on the other hand, it has also focused on laying down the roadmap for tax administration and simplification of the tax filing process.
(The author is Senior Director; Anurag Jain is Senior Manager; and Shubham Goel is Deputy Manager with Deloitte Haskins and Sells LLP)