Interim Budget 2019 and Union Budget 2019- Highlights of Income tax updates for Individual- Financial Year 2019-20

Tax rate and Rebate

  • Individuals whose total income (after deductions and exemptions) is not more than INR 5 lakhs will get a rebate(i.e., reduction) of total tax liability. Thereby resulting in a Zero tax liability on income upto INR 5lakhs. NRIs are not eligible for this rebate.
  • Surcharge on Individuals 10% on total income in the range of INR 50 lakhs to INR 1 crore 15% on total income in the range of INR 1 crore to IR 2 crore 25% on total income in the range of INR 2 crore to INR 5 crore 30% on total income exceeding INR 5 crore

Deductions and exemptions

Standard Deduction: salaried Individuals eligible for a flat deduction of INR 50,000 which was earlier INR 40,000

Housing benefits: Additional deduction of INR 1,50,000 towards housing loan interest, for first time affordable home ( less than INR 45 lakhs) buyers who have been sanctioned loan during the FY 2019-20. This deduction is in addition to the regular deduction of INR 200,000 towards interest on housing loan. So if you have purchased a house during FY 2019-20 you may get total deduction of upto INR 3,50,000.

Purchase of electric Vehicle: Deduction upto INR 1,50,000 can be claimed towards interest on loan taken for purchase of electric vehicle. This benefit is available only for the first vehicle purchased with loan sanctioned after April 01, 2019

Gain on sale of house: Individual can invest the gain on sale of house in purchase / construction of 2 new house properties and claim the tax exemption on gain from sale. This exemption can be claimed only once in tax payers life time

Filing tax return is mandatory even if there is a NIL tax liability

If any person has made cash deposits of of more than INR 1 crore in aggregate, during a year

Expenditure on travel to foreign country, if more than INR 2 lakhs during a year. Even the amount spent for travel of any other person shall also be considered for calculating the threshold.

If Aggregate of electricity bill during the year exceeded INR 1 lakh

If Rebate is claimed on entire tax liability in case of income not more than INR 5 lakhs

Notional Rent on House Property

If there are 2 house properties held for personal use, without being let out, there is no need to pay tax on the notional rent on both houses. Earlier the tax payers were required to pay tax on the notional rent on one of the 2 houses held without letting out.

Tax to be Deducted at Source

Cash withdrawals: 2% tax shall be deducted by the bank on cash withdrawals in excess of INR 1 crore during a year. Credit for the same can be claimed by the account holder while filing the tax return.

Interest on Fixed deposits: No tax shall be deducted by the bank on the Fixed deposit interest upto INR 40,000. Tax payers are liable to disclose the interest income and pay tax at the time of filing the tax return.

Other Misc Changes

NRIs receiving gift in any form from a resident India shall be taxable in India on that value, even if they don’t have any source of income or have not visited India during the year. Exemption may be claimed in certain specified conditions.

Ministry has made a big impact changes to link PAN and Aadhaar with respect to many financial matters. Every person can now interchangeably use Aadhaar in place of PAN. Henceforth any document requiring the mention of PAN , shall also mandate the quoting of Aadhaar number of the person.

If you need expert advise on tax planning and return filing, kindly refer to our contact details to connect with us. We are happy to guide you.

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