5 interim budget reforms which shall help in better financial planning in FY 2019-20

April 1 marks the beginning of the new financial year and there are new ways and means in which one can make some well planned investments to reduce their income tax liability.

Income Tax (Source: PTI)

  New Delhi: April 1 marks the beginning of the new financial year and there are new ways and means in which one can make some well planned investments to reduce their income tax liability. The citizens can benefit from the new changes announced by government in the interim budget presented by Piyush Goyal on February 1. The Centre announced many reforms in the income tax structure and personal finance schemes whereby tax payers would breathe a huge sigh of relief, shelling out lesser taxes. Your financial planning for the new financial year, i.e., 2019-20 should be taken in line with the changes in the personal finance landscape that come into effect from April 1 this year. So here are five tax and other key changes that you must keep in mind for this financial year. 1. Zero tax on taxable income up to Rs 5 lakh As per interim budget 2019, one would not be required to pay any tax if your taxable income does not exceed Rs 5 lakh for financial year 2019-20 except in a few specific cases. As announced in the interim budget 2019, individuals having taxable income up to Rs 5 lakh in a financial year will be able to avail full tax rebate and thereby will not be required to pay any tax on this income. 2. Standard deduction limit hiked to Rs 50,000 In a bid to help tax payers save income tax in the new financial year, Interim Budget 2019 also hiked the standard deduction from salary from Rs 40,000 to Rs 50,000, an increase of Rs 10,000. 3. No income tax on notional income from second house With effect from FY 2019-20, people owning a second house, lying vacant will not be required to pay any income tax on the notional rent from this house. Till FY 2018-19, an individual having a second house which was not let out was required to calculate notional rent and pay tax on it accordingly. 4. External benchmark to decide interest rate on loans The Reserve Bank of India (RBI) in its bi-monthly monetary policy meet held in December 2018 announced that all new floating rate personal or retail loans such as housing, auto etc and to micro and small enterprises would be linked to an external benchmark. Before the announcement, loans were linked to an internal benchmark, i.e., marginal cost of funds based lending rate (MCLR), prime lending rate (PLR) and benchmark prime l 5. New GST rates and rules for housing sector As per the announcement made by the GST council in its 33rd meeting held on February 24, 2019 and subsequent clarification, the new rates of Goods and Services Tax (GST) for the real estate sector will come into effect from April 1, 2019.