Interim Budget Brings Uncommon Benefits for the Common Man
When Piyush Goyal stood up to present the Interim Budget 2019, few would have anticipated the big shift from convention. It became evident that the Interim Budget was not going to be a vote-on-account.
Above all, Goyal also set the stage for ring-fencing the budget from political considerations. Why should politics determine the economic health of an economy? Rightly so; therefore, let us understand how the common man benefits from the Interim Budget 2019.
Big Tax Boost for Taxpayers
Even the most optimistic of taxpayers would not have anticipated such a huge shift in exemption. The budget has proposed making net taxable income up to Rs5 lakh tax-free in the hands of the taxpayer. Of course, it will be allowed as a rebate, but that hardly matters! What matters is that if you consider the enhanced standard deduction of Rs50,000 and add the benefits of Rs1.50 lakh for Section 80C and Rs2 lakh for Section 24, what do you get? We are not done yet. You can also safely assume an individual taxpayer is paying Rs50,000 for health insurance annually and another Rs50,000 as NPS contribution. Hold your breath; but income up to Rs10 lakh can be technically tax-free now. That is a huge boost to money with the public. However, this is just a proposal at present and needs to be cleared by the Cabinet.
Bit of Simplicity in TDS Deductions
TDS is just deduction of tax at source and does not impact your tax liability. But, the hassle pertains to the filing of returns and then waiting for your refund. All that was time consuming! What the government has done in this case is to increase the exempt interest income for TDS purposes from Rs10,000 to Rs40,000 per year. You have little to worry about Form 15G or Form 15H and filing of returns to claim refunds. In addition, the TDS on rent paid has also seen a threshold increase from Rs1.80 lakh to Rs2.40 lakh, again reducing the amount of time lost in compliance.
Getting an Incentive to go for Second Property
A lot of taxpayers have been hesitating buying a second property for two reasons. Firstly, there is the aspect of notional rent, which is taxable, and secondly, there is the issue of capital gains in case you sell a property to buy another. The budget has tried to address both the issues. Firstly, the concept of taxing individuals on notional rent in case of second property has been done away with. This will be a big boost for resident Indians and for NRIs. Secondly, the capital gains from the sale of property can now be reinvested in 2 properties (as against 1 property) and tax exemption can be claimed under Section 54. This will be a boost for those who are looking to sell property in a metropolis and reinvest in multiple properties in smaller towns.
Finally, Rural Folk Have a Lot to Cheer About
We have spoken about helicopter money (dropping money into people’s hands) in the past and that is exactly what the budget has done to nearly 12cr farmers. These 12cr marginal farmers have been assured an annual income of Rs6,000 payable in three equated tranches each year. This will add nearly Rs75,000cr in terms of purchasing power to the pockets of rural India.
Interim budgets normally shy away from announcing any major changes in the Finance Bill (tax rates). To the credit of the NDA government, they have broken convention. Considering the upcoming elections this year, this will go a long way in enhancing the happiness quotient of the common man.
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