Union Finance Minister Piyush Goyal on Friday announced in his budget speech that individual taxpayers with annual income up to ₹5 lakh will not have to pay any income tax, adding that the present I-T rates would continue.
Individuals with gross income of up to ₹6.5 lakh would not have to pay any tax if they make investments in provident funds and other prescribed methods.
"Even those earning ₹6.5 lakh can pay zero tax if they invest in specified savings. In fact, with additional deductions such as home loan deductions and medical insurance and expenditure deductions, even persons with higher income will not have to pay tax," said Mr. Goyal. "This will give ₹18,500 crore tax benefit to an estimated 3 crore middle class people," he said.
Standard tax deduction for salaried persons had been raised from ₹40,000 to ₹50,000.
In addition, the Minister announced a raise in the exemption limits for Tax Deducted at Source (TDS) on interest from bank and post office deposits from ₹40,000 from ₹10,000. The TDS exemption on rent has also been raised to ₹2,40,000 from ₹1,80,000
Mr. Goyal announced that all income tax returns would be processed in 24 hours and refund initiated. He said that 99.54% of all returns were accepted as filed without any scrutiny. Under a new technology, in the next two years, the entire process of return scrutiny would be done at the back-end so that a taxpayer need not interact with an official.
Mr. Goyal thanked the honest taxpayers and pointed out that the direct tax collection had increased substantially.
“Direct tax collections from ₹6.38 lakh crore in 2013-14 to almost ₹12 lakh crore; tax base up from 3.79 crore to 6.85 crore. There has been an 18% increase in direct tax collections in 2017-18. About 1.06 crore people have been included in the tax base. More than one crore citizens had filed I-T returns for the first time after demonetisation. Simplification of the direct tax system will benefit the taxpayers. Direct tax has been reduced and tax interface made simpler and faceless to make life easier, resulting an in increase in tax collections and return filings,” he said.