Union Finance Minister Nirmala Sitharaman left the income tax slabs unchanged in her Union Budget 2019. This led to questions over what was in Budget 2019 for the middle class. Nirmala however announced a slew of other measures that could bring some cheer for the middle class, particularly home owners and buyers.
Delivering her first Union Budget speech in the Lok Sabha, Nirmala affirmed the interim budget proposal to do away with income tax for those whose taxable earnings are below Rs 5 lakh.
Added to this, she also announced a number of changes to income tax exemptions that could reduce the tax burden for home owners and buyers.
Here are some of the measures that the middle class could benefit from:
- Those taking loans to buy self-occupied affordable housing (costing up to Rs 45 lakh) this financial year will be able to claim interest deduction of up to Rs 3.5 lakh. So far, eligible home buyers were able to claim interest deduction of up to Rs 2 lakh. Nirmala estimated that this would lead to benefit of about Rs 7 lakh over a 15 year loan period.
- Deduction of interest on loan taken to purchase self-occupied house property was increased from Rs 1.5 lakh to Rs 2 lakh.
- The base year for calculation of long term capital gains has been shifted from 1981 to 2001. This would bring a reduction in the capital gains tax liability for those selling property.
- The holding period for long-term gain on immovable property has been reduced from 36 months to 24 months.
- Safe harbour of 5% on stamp duty value has been given for the calculation of capital gains on immovable property.
- The deduction limit for savings under section 80C increased from Rs 1 lakh to Rs 1.5 lakh.
- The deduction limit for medical insurance raised from Rs 15,000 to Rs 25,000.
