Here’s a simplified summary of the Union Budget 2019 for India (including the proposals from the Interim budget presented in February 2019)
If you are a …
Salaried Individual / Pensioner (no change since interim budget)
- Net taxable Income :
- upto 5 Lakhs – Tax liability zero
- above 5 lakhs – No change to previous tax liability calculations
- Standard Deduction increased by 10,000
- Interest income on bank/post office deposits up to 40,000 will not be subject to TDS – Earlier was 10,000
- Lump sum withdrawal of 60 per cent from NPS (National Pension Scheme) has been proposed to be tax free at the time of maturity. Currently its EET – Exempt, Exempt and Taxable, meaning that on withdrawal NPS was partially taxable till now.
- NPS Trust will be separated from Pension Fund Regulatory and Development Authority (PFRDA)
- Retail investors in CPSE (Central Public Sector Enterprises) ETFs could get ELSS-like income tax benefits which currently provide upto 1.5L deduction under Section 80C of the IT act.
- Additional deduction of 1.5 lakh rupees on interest paid on loan for a house valued up to ₹45 lakh.
- If more than 1 self occupied houses, then notional rent on 2 houses is not taxable -earlier only 1 self occupied house was exempt. Notional rent taxable on more than 2 self-occupied houses.
- Long term Capital Gains upto 2 crore from Property Sale can be re-invested in two house properties -earlier was 1 property only
- If property is rented to non-individuals (typically corporates/ business tenants), then TDS will not be deducted by your tenant if your annual rental income is upto 2.4 lakhs – earlier was 1.8 lakhs
Non Resident Indian (as per the Income Tax Act)
- NRI’s with Indian passports can get Aadhaar cards after arrival in India without waiting for 180 days.
- NRI portfolio investment scheme route is proposed to be merged with FPI (Foreign Portfolio Investment) route. This should help bringing larger pools of NRI capital through pooled and professionally managed structures and provide NRI’s with easier access to Indian equities.
- Gifts of funds or immovable property made to a non-resident will now be deemed to accrue in India and would also be under the purview of the DTAA norms, however the exemptions for such gifts would continue as earlier in case of such gifts being made by relatives, will or inheritance proceeds, marriage gifts etc.
High Net-worth Individuals
- 3% higher effective tax rate for income between ₹2-5 crores
- 7% higher effective tax rate for income more than ₹5 crores
- Threshold for applicability of lower corporate tax rate of 25% has been increased from ₹250 crore to ₹400 crore.
- Banks will deduct 2% TDS for cash withdrawals exceeding ₹1 crore in a year from a bank account.
- Merchant discount rate won’t be charged on businesses with yearly turnover of over Rs.50 crore and also on their customers. RBI and banks will absorb these costs. The move is expected to be a major push to cashless payments.
- PAN and Aadhaar now interchangeable:, This will benefit tax payers who do not have PAN will allow them to file returns by simply quoting Aadhar number and use it wherever they require to use PAN.
- Pre-filled tax returns to be introduced with salary, capital gains, bank interest, dividends details. Information will be collected directly from the relevant sources. This will reduce the time spent in filing and will increase accuracy of reporting.
- Additional income tax deduction of 1.5 lakh rupees on the interest paid on the loans taken to purchase electric vehicles.
- Custom duty on Gold and precious metals increased from 10% to 12.5%
Mandatory filing of IT returns
Persons who enter into certain high value transactions have, it has been made mandatory to file their tax returns even if their taxable limit is less than ₹2.5 lakh.
The transactions include:
- Depositing an amount exceeding ₹1 crore one or more current accounts.
- Expenditure of more than ₹2 lakh for himself or any other person for travel to a foreign country.
- Expenditure of an amount or aggregate of the amounts exceeding ₹1 lakh towards consumption of electricity.