Taxpayers alert! 5 significant tax changes you need to know-article

Union Budget 2019: There was a lot of ambiguity till the last minute whether the budget presented by the interim Finance Minister would be a full or an interim budget. The budget also had a lot of expectations from different strata of the society. Though there have not been many changes at the corporate tax level, quite a few significant changes have been proposed at the personal tax level.

Major Relief for low and middle class income earner: Individual taxpayers having net taxable income (i.e. income net of eligible deductions under Section 80C, 80D etc.) up to Rs 5,00,000 will enjoy a full tax rebate i.e. a tax saving up to Rs 13,000. The government has smartly kept the tax net intact despite giving major relief to approximately 30 million tax payers.

Minor relief for salaried individuals: The standard deduction for salary income has been increased from Rs 40,000 to Rs 50,000, resulting into a small tax savings in the range from Rs 2,080 (for individuals falling in the tax bracket of 20%) to Rs 3,588 (for individuals falling in the highest tax bracket).

Ease of tax compliance: The threshold for deduction of tax (TDS) from bank/ post office deposits has been increased from Rs 10,000 to Rs 40,000 (for senior citizens, it was Rs. 50,000). Also, the threshold for TDS on rent paid by certain taxpayers is increased from Rs 1,80,000 to Rs 2,40,000. The payer and payee of such income are likely to get relief from tax compliance burden to such extent.

Relief to house owners: Taxpayers now will be allowed to own two self-occupied house properties without paying tax on the notional rent for the second house. However, deduction due to housing loan availed for both such properties will be capped at Rs 2,00,000 only.

Now, capital gain exemption under Section 54 has been extended to second house property also. This is only applicable where the amount of capital gains does not exceed Rs 20 million and the taxpayer can claim such exemption only once in his or her lifetime.

Digital transformation: With a vision to create a tax-friendly environment, the government has showed its vision to set up a facility to process tax returns within 24 hours and tax refunds simultaneously. The scrutiny assessment of returns will be undertaken electronically through anonymized center.

To match the anticipation, once again, the Modi government has taken bold steps and presented an almost full budget. With these proposals, the Modi Sarkar has attempted to become a Santa Clause for low earners, labourers from unorganised sectors and farmers.