Finance Minister Piyush Goyal on Friday announced that individual taxpayers with annual income up to ₹5 lakh will not have to pay any Income Tax, adding that the present I-T rates will continue.
Individuals with gross income of up to ₹6.5 lakh would not have to pay any tax if they make investments in provident funds and other prescribed methods. "Even those earning ₹6.5 lakh can pay zero tax if they invest in specified savings. In fact, with additional deductions such as home loan deductions and medical insurance and expenditure deductions, even persons with higher income will not have to pay tax," said Mr. Goyal in his speech during the interim Budget.
"This will give ₹18,500 crore tax benefit to an estimated 3 crore middle class people," he said.
Standard tax deduction for salaried persons was raised from ₹40,000 to ₹50,000.
In addition, the Minister announced a raise in exemption limits for Tax Deducted at Source (TDS) on interest from bank and post office deposits from ₹40,000 from ₹10,000. The TDS exemption on rent has also been raised to ₹2,40,000 from ₹1,80,000
New technology
Mr. Goyal also announced that all Income Tax returns will be processed in 24 hours and refund initiated.
The Minister said that 99.54% of all returns were accepted as filed without any scrutiny. Under a new technology, in the next two years the entire process of return scrutiny will be done at the back-end so that a tax payer need not interact with an official, he said, during the interim Budget.
Mr. Goyal also thanked honest tax payers and said the direct tax collection had increased substantially.
“Direct tax collections from ₹6.38 lakh crore in 2013-14 to almost ₹12 lakh crore; tax base up from 3.79 crore to 6.85 crore,” he said. "There has been 18% increase in direct tax collections in 2017-18. About 1.06 crore people included in tax base," he added.
He also said that more than one crore citizens had filed I-T returns for the first time, after demonetisation.
“Simplification of direct tax system will benefit taxpayers. Direct tax has been reduced and tax interface made simpler and faceless to make life easier, resulting an in increase in tax collections and return filings,” he said.