Budget 2019: How much tax you may save if govt hikes exemption, deduction limits

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Updated: January 23, 2019 12:07:20 PM

With the general elections round the corner, there are expectations that the Budget 2019 may be a populist one.

Budget 2019, Union Budget, income tax slabs, personal income tax, tax exemption limits, tax deductions under section 80C, 80C benefits, interest on home loan, deduction limit on home loan interest, tax slabs for senior citizensSenior citizens in the 60-80 years age bracket may also see hike in exemption limits to Rs 3.5 lakh from Rs 3 lakh.

With the general elections round the corner, there are expectations that the Budget 2019 may be a populist one. According to the popular demands, the basic exemption limit for personal income tax might go up to Rs 3 lakh from Rs 2.5 lakh and the upper threshold for deduction under Section 80C for assorted investments could move to Rs 2 lakh from Rs 1.5 lakh.

Similarly, senior citizens in the 60-80 years age bracket may see hike in the exemption limit to Rs 3.5 lakh from Rs 3 lakh currently.

It is also expected that deduction for interest paid on housing loan for self-occupied properties could be raised from Rs 2 lakh to Rs 2.5 lakh.

Now let’s see how much tax payers may gain if the expectations are fulfilled by Finance Minister Arun Jaitley.

1. If tax exemption limit is increased from Rs 2.5 lakh to Rs 3 lakh – people earning up to Rs 3 lakh don’t have to pay any tax, while people having taxable income above Rs 3 lakh will save up to Rs 2,500 (i.e. 5 per cent of Rs 50,000 excluding cess).

2. If the deduction limit under section 80C of the Income Tax Act is hiked from Rs 1.5 lakh to Rs 2 lakh –

  • People having taxable income up to Rs 5 lakh would save tax up to Rs 2,500 (i.e. 5 per cent of Rs 50,000 excluding cess), provided they fully use the enhanced limit of Rs 50,000 in tax-saving investments.
  • People having taxable income up to Rs 10 lakh would save tax up to Rs 10,000 (i.e. 20 per cent of Rs 50,000 excluding cess), provided they fully use the enhanced limit of Rs 50,000 in tax-saving investments.
  • People having taxable income above Rs 10 lakh would save tax up to Rs 15,000 (i.e. 30 per cent of Rs 50,000 excluding cess and surcharge, where applicable), provided they fully use the enhanced limit of Rs 50,000 in tax-saving investments.

3. If the deduction for interest paid on housing loan for self-occupied properties is raised from Rs 2 lakh to Rs 2.5 lakh, home buyers would save same amount of tax as illustrated in Point No. 2, provided they pay Rs 2.5 lakh or more interest on home loan.

So, in case benefits of all the expected tax sops are availed, a person having taxable income –

  • between Rs 2.5 lakh to Rs 3 lakh may gain up to Rs 2,500 (excluding cess);
  • between Rs 3 lakh to 5 lakh may gain up to Rs 7,500 (excluding cess);
  • between Rs 5 lakh to 10 lakh may gain up to Rs 22,500 (excluding cess) and
  • above Rs 10 lakh may gain up to Rs 32,500 (excluding cess and surcharge, where applicable)

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