Budget 2019-20: The Interim Budget in February has proved to be in the taxpayers best interests, which led to taxpayers having their hopes pinned high for the Union Budget 2019.
Union Budget 2019 India: The Union Budget for 2019-20 has been announced by the Minister of Finance, Nirmala Sitharaman in the Parliament. This is the first Budget by the re-elected Modi government post the Lok Sabha elections. The Interim Budget in February has proved to be in the taxpayers best interests, which led to taxpayers having their hopes pinned high for the Union Budget.
Taxpayers, especially in the salaried class, middle-income class, pensioners, and senior citizens had been speculating over major tax benefits that could have been announced in the Budget. Well, the time has now come to put all those expectations to rest.
Here is the list of tax proposals that have been announced for taxpayers in the Budget 2019-20:
Surcharge on Income Tax
A surcharge has been proposed for individuals in the higher taxable income brackets. Individuals earning an annual income between Rs.2 crore to Rs.5 crore have to pay a surcharge of 25% from the current 15% from FY 2019-20 onwards. For people earning an annual income of above Rs.5 crore must pay a surcharge of 37% from the current 15% from FY 2019-20 onwards.
Relief for Pensioners
A huge relief for pensioners as all NPS proposals of the cabinet recommendation have come through in the Budget. As per the new proposal, all Central Government employees who contribute towards his/her Tier-II account of the National Pension Scheme (NPS) will be eligible for tax benefits under Section 80C. The limit for contribution made by employer for central govt employees eligible for deduction under section 80CCD(2) has been increased from 10% of basic +DA to 14% of Basic +DA. Unfortunately, both of these benefits are only for central government employees. We strongly feel these should have also been made available to non-government employees.
At the time of withdrawal, earlier 40% of the corpus was subject tax free, this limit has been increased to 60%. This would benefit pensioners and give them access to more disposable funds.
Tax Deductions on Interest Paid Towards Home Loans
The government has proposed to introduce a new section 80EEA where taxpayers are eligible for additional benefits up to Rs 1.5 lakh on the interest paid. This would bring the total tax deductions to Rs 3.5 lakh considering the benefits one would be eligible for under Section 24 as well on home loan interest (Rs 2L). However, the benefits can only be availed if the stamp duty value of the concerned property does not exceed Rs 45 lakh and the loan is sanctioned between 1 April 2019 and 31 March 2020.
Introduction of Section 80EEB
Under Section 80EEB, individuals shall be eligible for tax benefits up to Rs 1.50 lakh on the interest paid toward vehicle loans availed for the purchase of an electric vehicle from any financial institution. However, the loan must be availed between the period 1 April 2019 and 31 March 2023. Also, the individual should not own any other electric vehicle as on the date of sanction of loan.
The Union Budget 2019-20 has addressed and provided resolutions to the common taxpayers’ issues. “It is because of their valuable contribution that our government is able to work for our collective dream of inclusion and all-round development of our nation,” said Nirmala Sitharaman while delivering the Union Budget 2019-20. The new provisions that have been drafted will not only facilitate the lives of taxpayers but also help the nation reach a $5 trillion economy in the next 5 years. However, there are no tax reliefs for any taxpayers – only higher taxes for some. Perhaps, an increase in the minimum exemption threshold should have been considered, given the growth in collections of 78%.
(By Archit Gupta, Founder & CEO ClearTax )