Budget 2019-20: Currently, individuals having income below the exemption limit are not required to file the return of income.
Union Budget 2019 India: The Budget 2019 proved to be a big disappointment for small and medium taxpayers looking for a handful of income tax sops from the new Finance Minister Nirmala Sitharaman. Since nothing much was done for them in the Interim Budget 2019 besides making income up to Rs 5 lakh tax-free apart from giving a couple of other small tax incentives, it was widely expected that under Modi 2.0 something must be done for the middle income group also. Such as making some changes in the income tax slabs and rates, or increasing the Section 80C deduction limit to Rs 2 lakh at least. However, nothing of this sort happened as the newly-elected FM’s primary focus was on infrastructure development, Bharat, affordable housing and digital economy.
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Industry experts say the focus of this year’s Budget is on stimulating growth, promoting affordable housing and incentivising digital economy. For instance, “introduction of additional tax deduction of Rs 1.5 lakh for those buying affordable housing units by March 2020 will help in reviving subdued demand in the housing industry. Capital infusion in public sector banks and partial credit guarantee for high-rated asset pools of strong NBFCs will help in improving liquidity in the NBFC segment and credit flow to MSME segments. Additionally, 2% interest subvention for GST-registered MSMEs on fresh and incremental loans will provide much-needed boost to MSME segment by reducing their cost of credit. The proposal to levy TDS of 2% on cash withdrawal beyond Rs 1 crore per bank account in a year will discourage cash transactions and promote digital payments,” says Naveen Kukreja – CEO& Co-founder, Paisabazaar.com.
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Whatever be the case, the Budget succeeded in giving some incentives to the common man. Here’s a look at 6 such incentives and new tax rules which you need to know:
1. Impetus to affordable housing
In a bid to give a boost to affordable housing and also to enable the home buyers to have low-cost funds at their disposal, the FM has proposed additional deduction of Rs 1.5 lakh for interest on housing loan taken until March 31, 2020, “provided stamp duty value of house property does not exceed Rs 45 lakh and the individual does not own any residential house property on the sanction of the loan. This will help middle class tax payers who are looking for purchasing affordable houses,” says Poorva Prakash, Senior Director, Deloitte India.
2. Tax incentive for electrical vehicles
To combat pollution and give a boost to the sales of electrical vehicles, the FM has proposed a new tax deduction on the interest of loan taken for the purchase of EVs. This deduction up to Rs 1.5 lakh will be available under a new Section 80EEB in the I-T Act and will be given from April 1, 2020. The loan, however, needs to be availed between 1st April, 2019 and 31st March, 2023 from a financial institution. One condition being that the person does not own any other EV on the date of sanction of the loan.
Budget 2019: Understand Nirmala Sitharaman’s Budget for new India in 2 minutes
3. Important changes proposed with regard to filing of ITR
Currently, individuals having income below the exemption limit are not required to file the return of income. It has now been proposed for mandatory filing of ITR by individuals entering into the following high-value transactions:
i. Aggregate deposits exceeding Rs 1 crore in a current account or accounts maintained with bank/cooperative bank;
ii. Aggregate Travel expenditure exceeding Rs 2 lakh to a foreign country for himself or any other person;
iii. Aggregate expenditure exceeding Rs 1 lakh towards consumption of electricity.
iv. Any other prescribed expenditure.
4. Incentives to NPS subscribers
It may be noted that under the existing provisions of Section 10 of the I-T Act, any payment from the NPS Trust to an assessee on closure of his account or on his opting out of the pension scheme, to the extent it does not exceed 40% of the total amount payable to him at the time of such closure or on his opting out of the scheme, is exempt from tax. However, with a view to enable the NPS subscriber to have more disposable funds, the FM has proposed to amend this section to hike the said exemption from 40% to 60% of the total amount payable to the person. Thus, with this NPS withdrawals have been made completely tax-free. This amendment will become effective from 1st April, 2020.
5. Inter-changeability of PAN & Aadhaar
As per the Budget proposals, a person who does not have a PAN card but has Aadhaar, can use it in place of PAN while filing ITR, and such person will be allotted a PAN in the prescribed manner. “Another positive takeaway from the Union Budget 2019 is the interchangeability of PAN and Aadhaar for the filing of income tax return, which directly augments the usability of Aadhaar system and its wide-ranging solutions,” says Siddharth Kukatlapalli,Co-founder and CBO, Syntizen.
6. Rental housing policy to be in place
The Finance Minister has proposed that many reform measures will be taken up for promoting rental housing. According to her, the existing rental laws are archaic as the relationship between the Lessor and the Lessee does not get addressed by them in a realistic and fair manner. A Model Tenancy Law, therefore, will be established to enhance the rental housing market.