This is the election year and there was a fair bit of debate on what the 2019 Budget would look like — the build-up to February 1 had some expectations of tweaks and reliefs for the salaried tax payers especially the middle class.
The impact of major changes on personal income tax are set out below:
Tax rates: The tax slab rates, surcharge and health and education cess remain the same. However, resident taxpayers with income up to ₹5,00,000 will get a full tax rebate.
Standard deduction: The limit of standard deduction has been enhanced from ₹40,000 to ₹50,000.
House property income: As per the current laws, if the taxpayer owns more than one house property for personal use the rest of the properties are considered as deemed let out and income tax levied on a notional rental value. It has been proposed to extend the exemption limit to two house properties owing to issues faced by the middle class having to maintain a family at two locations on account of job movements.
Capital gains: The current laws provide the seller of a residential property with relief from capital gains tax, if the proceeds from the sale are used to acquire another residential property. The benefit of roll-over of capital gains has been proposed to be increased from investment in one residential house to two residential houses for a taxpayer having capital gains up to ₹2 crore. This benefit can be availed only once in a taxpayer’s lifetime.
There were other proposals on TDS on rent and interest as also reiteration of the digitisation of the tax assessment process to ensure seamless and smooth communication with the taxpayers. In keeping with expectations, the aam aadmi had something to cheer about.
( Uday Bhartia, senior tax professional,EY also contributed to the article. Views expressed are personal)
