The Interim Budget 2019 proved to be a mixed bag of sorts, but there were a fews sops going in the favour of the middle class. Usually overlooked, the middle class have got tax-breaks in the form of rebates, and tax exemptions on property. With more cash at their disposal, the middle class consumption power is expected to increase.
However, there are some misconceptions that we’ve cleared for you.
We’ve listed out a few of your tax benefits for the hopeful coming months.
The Finance Bill 2019 which will come into force from fiscal year 2020 has made interesting developments. Tax rebate has been increased to Rs 12,500 for taxable income upto 5 lakhs . All those earning less than Rs 5 lakh will get a full tax rebate. There is also an increase in standard deduction.Tax benefits for interest earned on bank deposits and home sales have also been increased.
A rebate isn’t really a refund. A rebate is just a concession put on an amount. You have to pay tax on the income which is saved after exemption and deduction. According to Section 87A, if your annual income is less than 3 lakh under the existing provisions, then you can claim a rebate of up to Rs 2,500.
Now, the limit of Income-tax rebate under section 87A has been increased to Rs 12,500 from Rs 2,500 for taxpayers having income up to 5 lakh.
Interestingly, those who earn more would also benefit from this if deductions are included. A deduction primarily reduced taxable income bringing down your gross liability. For salaried individuals, it is stated that standard deduction would increase from Rs 40,000 to Rs 50,000.
The benefit of rollover of capital tax gains will be also increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to Rs 2 crore rupees.
This can be exercised once in a lifetime. This will benefit joint families who sell one huge single house and wish to buy two separate homes. In this way, investors will save tax levied on long term capital gains (LTCG ) from this fiscal year. To clear your misconceptions, gain from your residential property within two years is considered short term capital gains (STCG). Only after two years are those considered LTCG.
The Finance Minister has raised the gratuity limit from Rs 10 lakh to Rs 30 lakh. Earlier Rs 10 lakh of gratuity amount was considered tax-free but it has been increased to Rs 30 lakh. Gratuity is money paid by an employer to an employees who complete 5 years or more with a company.
