Interim Budget brings relief to individual taxpayers; rebate under section 87A hiked to Rs 12,500 for income up to Rs 5 lakh

The announcement of the Interim Budget 2019 in the wake of the upcoming general elections had plenty in store for individual taxpayers. There are multiple reforms focused just on easing the individuals’ tax bite. While some changes took a drastic jump from their existing status quo like in the case of the increased limit of TDS on Post Office saving deposits and bank deposits, others slight, but equally significant improvements. Following are some of the benefits that have garnered a widespread positive response from individual taxpayers. Section 87A limit increased to reduce the tax burden [caption id=“attachment_5759311” align=“alignleft” width=“380”] Representational image. Reuters[/caption] The Section 87A limit of Rs. 3,50,000 has been hiked to Rs. 5,00,000 to help bring down taxes for those earning up to Rs 5 lakh. Individuals earning total income within Rs. 5,00,000 in the financial year 2019-20 will stand to benefit from this change. This has been done by increasing the maximum rebate allowed under section 87A to Rs. 12,500 from Rs. 2,500. Standard deduction increased: The announcement to raise the limit for standard deductions from the existing Rs.40,000 to Rs.50,000, as applicable from FY 2019-20 will reduce taxes for all salaried taxpayers. Pensioners also stand to benefit from this increase. Section 54 benefits extended further Section 54 of The Income Tax Act 1961 has been amended to help taxpayers invest their capital gains in two properties instead of one. For taxpayers with long term capital gains of up to Rs 2 crores, this benefit will help them claim exemption if they want to split their capital gains investment into two properties. This is a significant improvement even though the benefit can only be claimed once in the lifetime of the taxpayer. Increased TDS limit on the post office and bank deposits The TDS limit on the interest income earned on Post Office and bank deposits has been increased from Rs. 10,000 to Rs. 40,000. While such interest income continues to be taxable, only the threshold for TDS has been increased. There are fresh changes made to the limit of tax deductions (TDS) on rent as well. The current limit of Rs. 1,80,000 has been increased to Rs. 2,40,000.

**Complied by ClearTax  Respite for owners of two house properties For those owning two house properties, the taxpayers can now claim the second house property as a self-occupied property. As per the new norm, the owner will be able to calculate the income from such house properties with no tax being deducted on the notional rent of the second property. (The author is founder and CEO, ClearTax) Income tax calculator   To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day. To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.