Those earning Rs 5 lakh to get full tax rebate; higher standard deduction proposed
01 February 2019
Individual taxpayers having taxable annual income up to Rs5 lakh will get full tax rebate and therefore will not be required to pay any income tax.
While presenting the interim Budget 2019-20 in Parliament today the Piyush Goyal, the finance minister, said: “Because of major tax reforms undertaken by us during last four and half years, both tax collections as well as tax base have shown significant increase, achieving a moderate taxation-high compliance regime. It is, therefore, just and fair that some benefits from the tax reforms must also be passed on to the middle class taxpayers”
As a result, the Finance Minister added that even persons having gross income up to Rs6.50 lakh may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc.
In fact, with additional deductions such as interest on home loan up to Rs2 lakh, interest on education loans, National Pension Scheme contributions, medical insurance, medical expenditure on senior citizens etc, persons having even higher income will not have to pay any tax.
This will provide tax benefit of Rs18,500 crore to an estimated 3 crore middle class taxpayers comprising self-employed, small business, small traders, salary earners, pensioners and senior citizens.
For salaried persons, Standard Deduction is being raised from the current Rs40,000 to Rs50,000. “This will provide additional tax benefit of Rs.4,700 crore to more than 3 crore salary earners and pensioners”, the Finance Minister informed.
Tax Deduction at Source (TDS) threshold on interest earned on bank/post office deposits has been proposed to be raised from Rs10,000 to Rs40,000. “This will benefit small depositors and non-working spouses”, said the minister. Further, the TDS threshold for deduction of tax on rent has also been proposed to be increased from Rs1,80,000 to Rs2,40,000 for providing relief to small taxpayers.