Mumbai: Key gain from Budget towards Tax announcements could be attributed towards salaried and pensioners by way of higher standard deduction, rebate upto Rs 5,00,000 of income and non taxability of deemed rent on a 2nd house property (vacant).
Here is what you have gained –
1. Rebate on Income upto Rs 5,00,000 –
A big relief for all individuals with net taxable income upto Rs 5 lakh has been announced. Those whose income exceeds Rs 2.5 lakhs but upto Rs 5 lakhs had been paying tax on the amount at 5%. Therefore, it amounts to a saving upto Rs 13,000 for all those in this category.
However, one should note that the rebate is only for those with income upto Rs 5 Lakhs and if it exceeds this limit, reliefe may be ignored and taxed at normal slab rates of 5%, 20% and 30% plus cess and surcharge as applicable.
One may note that the income level for this purpose will be Net Taxable Income and not Gross Total Income. Therefore, someone with higher gross income may invest in tax saving avenues which would allow him to claim deductions, say under section 80C from his/her gross total income to reduce it to Rs 5 lakh or belowand claim the rebate benefit.
Read the difference between rebate and exemption.
2. Standard Deduction – increased to Rs 50,000
Salaried and pensioners would often bear the brunt of higher taxes to be paid with minimum possibility of tax adjustments. With this intent standard deduction which is a notional amount had been introduced.
Budget 2019 announcement has increased standard deduction for the salaried and pensioners class to Rs 50,000 from the pre-existing Rs 40,000 limit.
How much you save in your pocket (after considering surcharge and cess):
Rs 2080 – Income of Rs 5 lakh to Rs 10 lakh
Rs 3120 – Income from Rs 10 lakh to Rs 50 lakh
Rs 3432 – Income above Rs 50 lakh upto Rs 1 crore
Rs 3588 – Income >Rs 1 crore
3. Deemed Rental Income on 2nd House Property done away with –
Persons owning two houses were earlier liable to pay income tax on deemed rent on their second house (which was deemed to be let out) even if it was not rented out/vacant. One house was allowed to be treated as ‘self occupied’ property’ and no tax was payable on the same if it was self occupied/ vacant.
The above announcement comes as a relief for persons with two houses and will encourage investment in 2nd house property.
4. TDS provisions now more accomodating –
TDS threshold has been enhanced for income from bank and post office deposits for individuals aged up to 60 years from earlier Rs 10,000 to Rs 40,000. Also TDS threshold has been raised for non-individuals paying rent from Rs. 1.8 Lakhs to Rs 2.4 Lakhs. However, one may note, these moves are for conveniences and do not translate into tax savings.