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Budget 2019 : Updates

There were many hopes from The Union Budget 2019, given that 2019 is an election year. The middle class was hoping for tax rate cuts and there was talk of universal basic income being announced by the government. The small and medium sector braced for impact as all of this additional expenditure had to come from somewhere.

All sections seem to be in for a pleasant surprise, no corporate taxes have been raised, rebates for small taxpayers have been hiked, and small farmers will get direct support from the government which should help them grow and perhaps also boost agro stocks in the country.

A summary of the major tax measures in the budget is enclosed below for your reference.

We look forward to the full budget to be presented by the new government.

Standard Deduction Limit hiked

Standard deduction increased up to 50,000

The Budget proposes to hike the standard deduction available to salaried employees by Rs 10,000 from Rs 40,000 to Rs 50,000.

Increase in time limit of approval by competent authority for housing projects under Section 80-IBA

Time limit for 80-IBA approvals increased

As per the existing law, in case of Developers of Affordable housing, the housing project is to be completed within 5 years from the date of approval. The Budget 2019 proposes to extend the timeline by one year to a total construction period of 6 years for approval by the competent authority (i.e. from 31-03-2019 to 31-03-2020).

Tax rebate under section 87A hiked

Tax rebate under section 87A hiked

The Budget 2019 proposes to increase the maximum amount of tax rebate to Rs. 12,500. The tax rebate shall now be available to taxpayers having total income up to Rs. 5,00,000 instead of existing Rs. 3,50,000. This effectively makes incomes up to Rs 500,000 tax free.

Limits for Withholding tax on interest incomes hiked

Limits for Withholding tax on interest incomes hiked

budget 2019 proposes to hike the limit for applicability of Tax Deduction at source on interest incomes earned through banks, Co-op societies and Post offices from Rs 10,000 to Rs 40,000. This will provide relief to small savers with deposits.

Relaxation in Deemed Rent Provisions

Relaxation in Deemed Rent Provisions

In the first measure for home owners tax payers will now be able to declare not one but two properties as self owned and not have to pay deemed rentals on such other property. ( amendment of Section 23(4) of the Income tax Act 1961)

Home loan benefits available on two houses

Home loan benefits available on two houses

In the second measure, the government has allowed for the deduction on housing loans to be availed on more than one self occupied house, this is still subject to the aggregate limit of Rs 200,000 ( amendment of Section 24(5) of the Income tax Act 1961)

Long Term capital gains relief on purchase of multiple houses

LTCG relief on purchase of multiple houses

The third measure allows relief in case of long term capital gains under Rs 2 crore where exemption is now available upon investment of gains in up to two houses this was earlier available for only one house ( amendment of Section 54 of the Income tax Act 1961)

Limits for Withholding tax on rental income hiked

Limits for Withholding tax on rental income hiked

It is proposed in the budget of 2019 to raise the threshold limit of tax deduction on rental incomes from Rs 1,80,000 to Rs 2,40,000.

With inputs from Rishabh Nagpal

 

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