The Union Budget for the financial year 2019-20 was presented by finance minister Smt. Nirmala Sitharaman in Parliament on Friday July 5, 2019. The major impact on budget 2019 proposal on common man is as follows.
- Individual tax payers with income up to Rs.5 lakh taxable income will get full tax rebate after permissible deductions under Sections 80C to 80U. However, the super-rich, i.e., those earning more than Rs 2 crore but less than Rs 5 crore and those earning more than Rs 5 crore will have to pay higher surcharge.
- A new section 80EEA in the Income Tax Act is proposed so as to provide a deduction in respect of interest up to Rs.1.5 lakh on loan taken for residential house property from any financial institution subject to the following conditions:
(i) Loan has been sanctioned by a financial institution during the period beginning on the April 1, 2019 to March 31, 2020;
(ii) The stamp duty value of house property does not exceed Rs.45 lakh;
(iii) Assesse does not own any residential house property on the date of sanction of loan. This will come up to enhanced interest reduction of up to Rs.3.5 lakh on loans for self-occupied properties of affordable homes.
- Income tax deduction of ₹1.5 lakh on interest on loans taken to purchase electric vehicles.
- Period of exemption for capital gains arising from sale of house for investment in startups to be extended to March 31, 2021.
- Securities Transaction Tax (STT) will not be levied on the value of the contract but on the difference between the strike price and market price. It will reduce effective transaction cost. At present purchaser has to pay STT levied at 0.125 of settlement price in option price exercised and the seller has to pay STT at the rate of 0.05% on the option premium.
- Telephone charges including data charges reimbursed by the employer is exempt from tax.
- If you live in your own house, the HRA received by you is fully taxable.
- Section 80 TTA: Threshold for TDS on interest income from deposits with banks and post offices increased from Rs.10000/- to 40000/- u/s 80 TTA in the interim budget 2019.
- Section 80 TTB: From Financial year 2018-19, Senior citizens who have received deposit interest (including SB and Recurring Deposits interest) up to Rs.50000/- in a financial year are exempted from tax under Sec.80TTB. However, Senior Citizens whose aggregate annual deposit interest income exceeds Rs.50,000/- need to pay Income tax only for deposit interest income over and above Rs.50,000/-. Further, aggregate annual deposit interest income up to Rs 50,000/- for Senior Citizens is also exempted from TDS and they need not submit form 15 H for the annual deposit interest income up to Rs.50,000/-.With the introduction of Sec 80 TTB, Sec 80 TTA will not be applicable to Senior Citizens –ie SB interest exemption of Rs.10, 000/- is not separately available to senior citizens. Exemption under Section 80 TTA is available to others who are not Senior Citizens.
- Lump-sum withdrawal of 60 %( earlier 40%) from National Pension scheme is now tax free at maturity. Increase in deduction towards NPS contribution for all central government employees to 14% of basic pay from up from 10%
What will be cheaper?
- Buying electrical vehicles made attractive. GST rate on electric vehicles proposed to be lowered to 5% from 12%.
- Indigenously manufactured artificial kidneys (Known as dialyzers) will be cheaper on account of removal of custom duty on raw materials.
What will be dearer?
- Soap will be costlier due to Government levying custom duty of 7.5% on palm oil stearin and other oils having 20% or more free fatty acids and such chemicals.
- Cigarette and other tobacco items will be costlier, as the Government decided to levy an excise duty in addition to GST on these products.
- Proposed to increase custom duty on gold and other precious metals from 10 % to 12.5%. Buying Gold coins or jewelry will be costlier.
- Special additional excise duty on fuel of ₹1 per liter. With increase in taxes, the price of Petrol and Diesel would straightaway increase between Rs.2.30 to Rs.3.00.
- Duty raised on Tiles, cashew kernels, vinyl flooring, auto parts, some synthetic rubber, imported books, digital and video recorder and CCTV camera. House renovation with Italian marble or upgraded hardware fittings will be costlier.
