Budget 2019: 4 Major Income Tax Changes Common Man Can Expect From Modi Govt 2.0

As Finance Minister Nirmala Sitharaman is all set to present her maiden Union Budget for financial year 2019-2020 on July 5, expectations are high - not just from business industries but also among common citizens of the country.

Here's are few expected income tax changes that could be incorporated in the Union Budget 2019 by FM Sitharaman. (Image: Getty)

Budget 2019: As Finance Minister Nirmala Sitharaman is all set to present her maiden Union Budget for financial year 2019-2020 on July 5, expectations are high - not just from business industries but also among common citizens of the country. While it is the middle-income group with high expectations from Modi government 2.0 to lower the tax slabs, tax experts want the Finance Ministry to increase the overall tax exemption threshold or come up with some tax breakup slabs to reduce the strain on their household expenditure. Despite the Modi 1.0 government announced some major relief in tax slabs in the Interim Budget presented by the then Finance Minister Piyush Goyal on February 1, 2019, citizen expect some more sops largely on the income tax front. Several industry experts believe that the focus of the government would be on boosting the economy which has seen a stiff decline in the past one year with announcement of some elemental tax sops for the middle class reeling under the pressure of expensive cost of living. Here's are few expected income tax changes that could be incorporated in the Union Budget 2019 by FM Sitharaman and her team: Income Tax exemption limit: Since the Modi 1.0 government has already given full tax rebate of up to Rs 5 lakh under Section 87A in the interim budget, it is unlikely that there will any other alteration in the exemption. However, citizen and industry bodies expect the government to hike the tax exemption threashold from the current Rs 2.5 lakh to at least Rs 3 lakh. Having said that, government might also opt to keep the tax exemption threshold unchanged keeping in mind the declining economic growth of the country. Though increase in the tax exemption, if announced, will lead to a reduction in current tax base as more people will be exempted from paying income tax. With the government making it clear that it will focus on increasing country's tax base, such an announcement is highly unlikely. Increase in tax deduction limit under section 80C for certain payments/investments: The current deduction limit of Rs 1.5 lakh under section 80C for certain investments/payment has not changed in the last 5 years. Finance Ministry might consider increasing this limit to at least Rs 2 lakh, keeping in mind the increase in the cost of living and the need to boost savings. The increase in tax deduction limit will allow people save more tax on investments made under Section 80 C of the Income Tax Act. Such investments include: Public Provident Fund (PPF),  Employees' Provident Fund (EPF), National Savings Certificate (NSC), Fixed Deposits and National Pension Scheme (NPS). Deduction for payment of interest on housing loan: The government is giving signification focus on PM Narendra Modi's flagship housing scheme 'Housing for all' by 2022. Further, in order to give a boost to the ailing housing sector, the Finance Ministry might consider increasing the limit of deduction for payment of interest on housing loans from Rs 2 lakh to Rs 3 lakh. As per the current rule, people can claim a maximum deduction up to Rs 2 lakh under Section 24B of the Income Tax Act. Reintroduction of investment in Tax Saving Infrastructure Bonds: With an aim to provide world class infrastructure to its citizens, the government may consider re-introduction of the deduction for investment in infrastructure bonds up to Rs 50,000. The deduction for investment on such bonds was given to the extent of Rs 20,000 in FY 2010-11 and FY 2011-12. However, the same was subsequently withdrawn. This could help the government raise capital through government entities for infrastructure projects. These bonds are called 'tax-free' as the interest earned on them is not taxable.