Budget Highlights 2019

Finance Minister Ms. Nirmala Sitharaman presented the first budget for Modi 2.0 Government on 5^th July 2019.

The focus of the government is to provide the bare necessities of life to every Indian citizen and it is well on its way to delivering on that promise. Substantial expenditure on social infrastructure is continued in this Budget.

Here are the main take always from the budget:

1. There is no change in the personal income tax slabs. If your taxable income is upto 5 Lakhs, you need not pay any tax because the exemption under Section 87A is increased to 12,500. With investments in Section 80C, Standard deduction, Medical insurancepremium under Section 80D, Home loan interest etc one can try to reduce the taxable income to 5 Lakhs and escape the tax. But even after all these deductions, if your income is above 5 Lakhs, you are not getting any benefits under 87A.
2. There is an increase in surcharge from 15% to 25% for individual having income more than 2 Crores and 15% to 37% for individual having income more than 5 Crores. Surcharge is levied on the income tax paid. So the effective tax rate for those categories will be 39% and 42.74%.
3. For salaried class and pensioners, the standard deduction is increased from 40,000 to 50,000
4. Tax benefits upto 1.5 Lakhs on the interest paid on loan for buying an electric vehicle.
5. No TDS for interest income up to Rs. 40,000. But you have to declare the interest income and pay tax.
6. TDS increased from 1% to 5% on maturity of insurance policy if your sum assured is
   1. Less than 10 times of premium for policy purchased after 1^st April, 2012
   2. Less than 5 times of premium for policy purchased before 31^st March, 2012
7. The Government is planning to launch a CPSE ETF along the lines of ELSS. But looking at the performance of the earlier ETFs, it is better to avoid such offers for 80C benefits.
8. TDS of 2% if the cash withdrawal exceeds Rs 1 crore from a bank account. Do note it is only TDS. You can claim it back the extra tax deducted at the time of filing ITR
9. Pre-filled tax returns to be made available for investors.The information from various sources (banks, stock exchanges, mutual funds) shall be auto populated.
10. NRIs can now be issued Aadhaar card after their arrival in Indiawithout the waiting period of 180 days.
11. Regulatory authority of Housing Finance Companies to be shifted from National Housing Bank (NHB) to the Reserve Bank of India (RBI).
12. PAN and Aadhaar card to be made interchangeable. Those who do not have PAN card can file returns by quoting their Aadhaar card.
13. A new pension scheme (Pradhan Mantri Karam Yogi Maan Dhan Yojana) for Small Businessmen and Traders with a turnover of less than Rs. 1.5 crores.
14. Additional deduction of 1.5 Lakhs for home loan interest under Section 80EEA for first home buyers. This is in addition to benefit of 2 Lakhs interest paid under Section 24. The conditions for this are:
    1. The home loan must be sanctioned between April 1, 2019, and March 31, 2020.
    2. The stamp duty value of the house must not exceed Rs 45 lacs.
    3. You must not own any house on the date of sanction of the loan.

Since this is capped at 45 Lakhs, you will not be paying 3.5 Lakhs as interest in any case.  If you are purchasing your first house on loan during this financial year, you can get an additional tax benefit of around 1.5 Lakhs in a 15 year loan and if you are in the 20% tax slab and around 2 Lakhs, if you are in the 30% slab. Please see the attached article for details.

https://www.apnaplan.com/80eea-tax-home-loan/

Please mail me in case of any clarification.