It was an interim Budget presented by an interim Pope. But neither came in the way of the interim Finance Minister Piyush Goyal handing out significant reliefs to the common man. The icing on the cake of course was the first nation-wide income support system for the small and marginal farmers of Rs 6,000 per annum in three instalments of Rs 2,000 each starting December 2018.
On the direct taxes front, the following significant reliefs were announced in his interim Budget speech by Goyal:
A 100 percent tax rebate for individuals who report a taxable income not exceeding Rs 5 lakh as against Rs 3.5 lakh hitherto. To wit, if a person has a gross total income of Rs 6.50 lakh and makes a fixed deposit of Rs 1.50 lakh under section 80C in a bank, his taxable income would be Rs 5 lakh. He will not be called upon to pay any tax as he can claim the entire tax payable of 5 percent on income exceeding Rs 2,50,000, the tax exemption threshold, as rebate under section 87A. It must be remembered that the tax exemption threshold for others, i.e. whose total income exceeds Rs 5 lakh remains the same, i.e. Rs 2,50,000;
There will be TDS on bank and post office interest upto Rs 40,000 per annum. Last year senior citizens were exempted both from income tax as well as the rigors of TDS to the extent their savings and fixed deposit interest did not exceed Rs 50,000. Non-senior citizens have now been spared of the TDS rigor up to Rs 40,000 but without any income tax exemption up to Rs 40,000. In other words, they will have to include the same in their income and pay advance tax if warranted;
At present, one self-occupied house belonging to a taxpayer begets exemption from income tax. Now two such houses would beget income tax exemption. In other words, two self-occupied houses will not be taxed on the basis of their market rents as against one hitherto. This has been done on the compassionate ground that often a person buys a house both in his hometown as well as in the place of his work or the place of his child’s work;
An exemption has been made under Section 54 of long-term capital gains from sale of a residential house from tax provided the gains are invested in another house within the prescribed time. Now instead of one, two residential houses can be bought with the sale proceeds where the long term capital gains do not exceed Rs 2 crore. This is a welcome move in the interest of family harmony and ease of working;
The requirement on the tenant to deduct tax at source from rent now applies only if the annual rent is Rs 2, 40,000 or more. Hitherto the limit was Rs 1,80,000; and last, but not the least, standard deduction from salary has been hiked from Rs 40,000 to Rs 50,000.
Goyal also introduced an important measure in assessment----blind scrutiny assessments. In literary circles, blind referencing of thesis or paper for publication is common so that the reviewer does not know who the writer is. This salutary practice is now sought to be made the norm in income tax scrutiny assessments----the scrutiny assessment will be done by the assessing officer chosen at random by the computer software. This would eliminate the interface between the officer and the assessee and do away with arm-twisting leading to greasing of palms. Of course, this does not affect a large section of the assessees---99.4 percent to be precise, whose returns are accepted at face value.
(The author is a senior columnist and tweets @smurlidharan)
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Updated Date: Feb 01, 2019 15:13:37 IST