As Nirmala Sitharaman tables Full Budget on July 5, here's a recap of key changes made in income tax rules in Interim Budget

While it’s almost a month before government presents the full budget, let us take a look at some of the major chances announced by the Modi government in the income tax rules in the Interim Budget 2019.

By : Sahil Sinha | Updated at : 21 Jun 2019 03:39 PM (IST)

As Nirmala Sitharaman tables Full Budget on July 5, here's a recap of key changes made in income tax rules in Interim Budget As Nirmala Sitharaman tables Full Budget on July 5, here's a recap of key changes made in income tax rules in Interim Budget

Finance ministry will retain the contents of the interim budget that was presented in February this year. (File Photo/ Getty)

Finance Minister Piyush Goyal presented the Interim Budget 2019 on February 1

Nirmala Sitharaman will present the full budget on July 5

The finance ministry will retain the contents of the interim budget

Budget 2019: Months after the then Finance Minister Piyush Goyal presented the Interim Budget 2019 in the parliament on February 1, all eyes are now at the full budget which new Modi government is scheduled to present on July 5. It would certainly be a tough job for the newly appointed Finance Minister Nirmala Sitharam who would table the budget just one month and some days after taking charge of the critical portfolio. Expectations are high from everyone including common man, businessmen and taxpaying individuals as the nation hopes to get some new sops from Modi 2.0 government. Prime Minster Narendra Modi and his cabinet, over the last five years, have managed to surprise the country with lucrative schemes and announcements in almost all the budgets presented in their regime. As per reports, the finance ministry will retain the contents of the interim budget that was presented in February this year. Economic experts, however, are of the opinion that the government may have to tweak the budget slightly in order to increase consumer spending, which has slowed down significantly over the recent past. While it’s almost a month before government presents the full budget, let us take a look at some of the major chances announced by the Modi government in the income tax rules in the Interim Budget 2019. Rebate under Section 87A of the Income tax Act, 1961 Goyal, while presenting the Interim Budget 2019, announced that the rebate under Rebate Section 87A of the Income tax Act, 1961 has been increased to Rs 12,500. However, it is only applicable to those with net income of up to Rs 5 lakh per annum. A rebate is the amount of tax a salaried individual is not liable to pay. Therefore, in the next fiscal year, if an assessee has a net taxable income of up to Rs 5 lakh, then he/she is allowed to claim the entire tax payable as tax rebate. Earlier, a tax rebate of Rs 2,500 was provided to individual resident taxpayers whose taxable income was less than Rs 3.5 lakh per annum. Increase in standard deduction During the Interim Budget 2019, no changes were made in the income tax slabs or rates for individual taxpayers. However, giving some relief to the salaried taxpayers, Modi government increased the standard deduction from Rs 40,000 to Rs 50,000. A standard deduction reduces your taxable income, thereby reducing your tax liability. Taxation of self-occupied house properties During the Interim Budget 2019, the finance minister proposed exemption from notional rent in respect of two self-occupied house properties. Currently, if a person has two properties which are self-occupied, the deemed rent from one of the house properties is taxable. Before, 2019-20 fiscal, taxpayers having two residential houses, which were not self-occupied, were required to impute a notional value for rental income for one property and the value for the other house was taken as zero. Capital gains on residential properties The then finance minister also proposed to extend the one-time benefit of capital gains exemption on reinvestment in two house properties. This benefit will apply where capital gains are Rs 2 crore or less. Currently, the exemption is applicable only against one house property. Prior to this, capital gain earned on the sale of residential house was exempted if it was reinvested in one residential house in India. TDS on interest from bank or post office deposits The government has also increased the threshold on tax deducted at source (TDS) on interest from bank or post office deposits to Rs 40,000, from previous limit of Rs 10,000. This means interest income on bank or post office deposits up to Rs 40,000 will not be subject to TDS.

Published at : 07 Jun 2019 07:42 PM (IST)

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BUDGET 2019 Interim Budget 2019 Nirmala Sitharaman