Announcements related to individual salaried taxpayers.
- Section 87A of the IT section:
- rebate amount is now increased to Rs.12,500 from Rs.2500
- This applies to individuals whose taxable income is less than Rs. 5 Lacs vs earlier 3.5Lac
- This is not income limit, its “Taxable income” after all possible deductions under sections 80 C, 80 D, 80 E, and home loan int under section 24 b
- Standard deduction:
Standard deduction Limit is now increased to Rs. 50,000 from Rs. 40,000, this can be transportation and medical allowance reimbursements etc.
- TDS from Bank/ Post office FD/savings interest income:
Limit of interest for TDS is increased now 40,000 from present 10,000/- however this amount needs to be declared as income in your returns.
- The second property will be tax-free:
if an individual was having two houses, the tax was needed to be paid on the rent of any one of the house earlier. This is now revised as an individual has the option of not considering rent up to two houses.
- TDS on rental income:
TDS on rental income is now increased to Rs. 2,40,000 from Rs 1,80,000 per year.
Means, earlier TDS was a deducted for the rental amount of Rs. 15,000/ month is now changed to 20,000/month. NO TDS for rental income of up to Rs 20,000/month.
- An exemption under section 54 Capital Gains extended.:
An exemption under section 54 Capital Gains extended to 2 houses up to Rs. 2 crores. if an individual sells any residential house, earlier they should avail the exemption by reinvesting the sold amount in any one residential house. Now the individual can invest this capital gains amount up to Rs 2 crore in a maximum of 2 houses vs earlier 1.
- Quick Processing of IT returns:
Income tax returns will be done within 24Hrs for returns filed online, also refund will be processed at the same time if found without any dispute.
Summary with illustrations as per your taxable income slab
|Taxable Income (after all deductions as eligible from income)||Tax savings due to Budget 2019 in Rs/Year||Remarks|
|3 Lacs||-||Tax amount is 5% of Rs.50k, which is Rs.2500 à Rebate under 87A as earlier.|
|3.5Lacs||2600||Tax will be 5% of 1lac :Rs.5,000/- Rebate under 87A earlier 2500/- now 12,500/-so benefit is 2500/- + 4% edu ces on tax, 100rs = total savings Rs2600|
|5 Lacs||13000||Tax will be 5% of 2.5Lac :Rs.12,500/- Rebate under 87A is now 12,500/-( earlier no benefit) so benefit is 12,500/- + 4% edu ces on tax, 500rs = total savings Rs13,000/-|
|6Lacs||2080||Since taxable income crossed 5lacs, You are not eligible for Rebate under 87A. So only increase in standard deduction sec 16ia :Rs.2080/-( 20% of 10,000/- + edu cess)|
|7Lacs||2080||Since taxable income crossed 5lacs, You are not eligible for Rebate under 87A. so only increase in standard deduction sec 16ia :Rs.2080/-( 20% of 10,000/- + edu cess)|
|10Lacs||2080||Since taxable income crossed 5lacs, You are not eligible for Rebate under 87A. so only increase in standard deduction sec 16ia :Rs.2080/-( 20% of 10,000/- + edu cess)|
|Above 10.1 Lacs||3120||Since taxable income crossed 5lacs, You are not eligible for Rebate under 87A. so only increase in standard deduction sec 16ia :Rs.3120/-( 30% of 10,000/- + edu cess)|
As we can see above, you will get benefitted high, only when your total income is around 7 to 8lacs per annum, means taxable income at 5Lacs.
For others, it is only minor change due to change in the standard deduction and of course you may get a tax refund immediately after filing online if found acceptable 🙂
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