18 Feb 2019 04:02am IST
The newly announced Government of India Budget for the year 2019-20 provides significant relief to individuals in small and middle-income category with zero tax liability for income upto Rs 5 lakh.
This Budget is great boon to Goan tax payers married under Portuguese Civil Code. The spouses will not be required to pay any tax even if their total income other than salary does not exceed Rs 10 lakh. After taking usual tax reliefs, benefits such as life insurance premium, contribution to provident fund, investment in other tax saving schemes within the limit of section 80C, this exemption can go upto Rs 13 lakh and even more after considering medical insurance and other reliefs.
However, one should note carefully that they will not be exempted from filing tax returns if their income is between Rs 3.50 lakh to Rs 5 lakh as the income tax slab rates for the financial year 2019-20 which is called Assessment Year 2020-21 are exactly the same as in the last year
The relief of no tax upto Rs 5 lakh is provided through rebate under section 87A. Earlier the limit was Rs 3.50 lakh and the deduction permissible was Rs 2,500. Now it is increased to Rs 5 lakh and deduction available is Rs 12,500. In other words, the benefit will be available only when you file tax return. Failure to file the tax return will attract late filing fee.
An individual who is resident in India and whose total income does not exceed Rs 5 lakh is entitled to claim rebate under section 87A upto Rs 12,500.
Salaried Persons: The salaried persons and pensioners will now be eligible to claim standard deduction upto Rs 50,000, an increase of Rs 10,000 from earlier Rs 40,000. This is given in place of earlierallowance for transport upto Rs 1,800 per month and reimbursement of medical expenses of upto Rs 15,000 per annum.
Tax Deduction at Source (TDS): TDS limit on bank Fixed Deposits and post office schemes is raised from Rs 10,000 to Rs 40,000. This is available for resident Indians irrespective of their age. However, the TDS limit of Rs 50,000 provided to senior citizens who is of age 60 years and above continues. Please note that exemption from TDS does not mean exemption ofincome tax on this income. This amount will continue to be liable for tax in normal case.
TDS on Rent: TDS was required to be deducted from rental income if the annual rent was Rs 1,80,000. Now the limit is raised to Rs 2,40,000.
Capital gains from sale of house: Presently you could escape tax on capital gains if the sale proceeds were invested in one house property only. Now you can split this amount for two houses. This can be done within two years. Though this provision will not save any tax,it will help to do estate planning for your family. However, this benefit will be available for capital gains of upto Rs 2 crore. Further, this benefit can be availed once in a life time.
Deemed Income from Self Occupied Property: Presently, if you own two residential houses, you are required to pay tax on one house even if it is locked and you do not get any income. The tax is calculated on notional income ie the rate at which it would have been let out in the open market. The burden of this, considering that the housewas located in urban area, was quite substantial. Now you can claim upto two houses as self occupied property with no notional income. Thus, there will be substantial savings in tax.
Income tax refunds within 24 hours: The returns filed by you will be processed within 24 hours and refund, if any, will be credited directly to your bank account specified in the tax returns. This will be possible because of the introduction of better technologies implemented by the Income Tax department for processing of Income tax returns. The earlier you file tax return, faster is the tax refund.
The above budget provisions will be effective after the Bill is approved by President of India from the notified date. These changes will be applicable for the next financial year ie FY 2019-20.