Budget update 2019 – Earn Ten Lakhs and still pay NO tax
With this Budget and as per announcements, It is now possible to achieve Zero Tax Goal even when you earn Rs 10 lakhs per year. See the following table
|Amount (in Rs)|
|Section 80C Exemption||-150,000|
|Interest on Home Loan||-200,000|
|Contribution to NPS||-50,000|
|Health Insurance premium payment||-50,000|
|Income Tax Payable||12,500|
|Rebate under section 87A||-12,500|
|Net Tax Payble||0|
In the above example, existing deductions under Income Tax Act under section 80C along with contribution to NPS (Section 80CCD1B), interest paid on home loan (Section 24) and health insurance premium paid (Section 80D; for both yourself and your senior citizen parents) has helped the individual to bring down his taxable income to Rs 5 lakh.
This will ensure that his income tax liability is reduced to zero if he files his income tax returns.
This is primarily due to many Direct Tax reforms brought by Finance Bill 2019-20. These reforms are aimed at providing relief to the individuals who fall under the middle class income bracket. It brings a general relief by increasing the tax slab limit and at the same time provides further relief to the salaried class by increasing the standard deduction.
Also it is noteworthy to know that this is the First budget in India by a Chartered Accountant.
Main takeaways from the budget (which are also incorporated in example above) are as follows:
- Individual taxpayers having taxable annual income up to Rs. 5 lakhs will get full tax rebate and therefore will not be required to pay any income tax
- TDS deduction on fixed deposit raised from Rs. 10,000 to Rs. 40,000
- Standard deduction for salaried class raised to Rs. 50000 from the current Rs. 40000
- Section 54: Now investment in 2 residential houses allowed as compared to the current 1 residential house
- No tax on notional rent on second self-occupied house and No TDS on house rent up to Rs 2.4 lakh
BUDGET Update 2019 – ALL HIGHLIGHTS
1. Within 2 years, Tax assessment will be done electronically
2. IT returns processing in just 24 hours
3. Minimum 14% revenue of GST to states by Central Govt.
4. Custom duty has abolished from 36 Capital Goods
5. Recommendations to GST council for reducing GST rates for home buyers
6. Full Tax rebate upto 5 lakh annual income after all deductions.
7. Standard deduction has increase from 40000 to 50000
8. Exempt on tax on second self-occupied house
9. Ceiling Limit of TDS u/s 194A has increased from 10000 to 40000
10. Ceiling Limit of TDS u/s 194I has increased from 180000 to 240000
11. Capital tax Benefit u/s 54 has increased from investment in one residential house to two residential houses.
12. Benefit u/s 80IB has increased to one more year i.e. 2020
13. Benefit has given to unsold inventory has increased to one year to two years.
14. State share has increased to 42%
15. PCA restriction has abolished from 3 major banks
16. 2 lakhs seats will increase for the reservation of 10%
17. 60000 crores for manrega
18. 1.7 Lakh crore to ensure food for all
19. 22nd AIIMS has to be opened in Haryana
20. Approval has to be given to PM Kisan Yojana
21. Rs. 6000 per annum has to be given to every farmer having upto 2 hectare land. Applicable from Sept 2018. Amount will be transferred in 3 installments
22. National kamdhenu ayog for cows. Rs. 750 crores for National Gokul Mission
23. 2% interest subvention for farmers pursuing animal husbandry and also create separate department for fisheries.
24. 2% interest subvention for farmers affected by natural calamities and additional 3% interest subvention for timely payment.
25. Tax free Gratuity limit increase to 20 Lakhs from 10 Lakhs
26. Bonus will be applicable for workers earning 21000 monthly
27. The scheme, called Pradhan Mantri Shram Yogi Mandhan, will provide assured monthly pension of Rs. 3,000 with contribution of Rs. 100 per month for workers in unorganized sector after 60 years of age.
28. Our government delivered 6 crores free LPG connections under Ujjawala scheme
29. 2% interest relief for MSME GST registered person
30. 26 weeks of Maternity Leaves to empower the women
31. More than 3 Lakhs crores for defence
32. One lakh digital villages in next 5 years
33. Single window for approval of India film makers
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