Interim Budget: TDS limit raised, no tax on income under Rs5 lakh
01 February 2019
Finance Minister Piyush Goyal announced in the government’s interim budget today that the rebate under Section 87A of the Income Tax Act has been enhanced to Rs12,500 from Rs2,500 earlier. The threshold has also been enhanced to income of Rs5 lakh from Rs3.5 lakh earlier. This will benefit taxpayers to the extent of an annual income of Rs5 lakh, but the basic exemption limit and tax-slabs remain the same.
What this means is the benefit is applicable only to those whose earnings are not more than Rs5 lakh. Moreover, those earning less than this amount will have to pay tax initially and seek a rebate while filing their returns.
Goyal concluded his Budget speech with the quote, Ek paav rakhta hun, hazaar raahein phoot padti hai (One step opens up a thousand roads).
Department of economic affairs secretary Subhash Chandra Garg said the roll-out of farm income support scheme starts in November. He pointed out that this scheme does not include those getting government support.
Measures for the salaried class will be effective 1 April, Garg told CNBC-TV18. The revenue loss from the change in income taxes will be roughly Rs24,000 crore, he said.
The Tax Deducted at Source (TDS) limit has been hiked from Rs10,000 to Rs40,000 on post office savings.
There will be no tax on notional rent on a second self-occupied house and no TDS on house rent up to Rs2.4 lakh.
Standard deduction has been raised from Rs40,000 to Rs50,000. TDS on interest income from bank deposits now at Rs40,000 from Rs10,000. Standard deduction limit has also been raised to Rs50,000 from Rs40,000.
This means that those with income up to Rs5 lakh and another Rs1.5 lakh in investments, totalling Rs6.5 lakh, will pay no tax. This is expected to benefit nearly Rs3 crore middle-class income earners.