The Interim Budget for 2019-20 was presented by then Finance Minister Piyush Goyal in the Parliament on February 1, 2019. Now in the second term of the Modi government, the Union Budget 2019 is scheduled to be presented soon on July 5, and with this all eyes are set on the newly-appointed Finance Minister Nirmala Sitharaman. There are also expectations galore as everyone from the common man to the business leaders is hoping to get something from Modi 2.0.
What will happen in the budget and what everyone will get is yet to be seen. However, before that happens, let us take a look at some of the major changes made in the income tax rules in the Interim Budget 2019, which are effective from the current financial year, ie. 2019-20.
Increase in Standard Deduction
In the Interim Budget 2019, no changes were made in the income tax slabs or rates for individual taxpayers. However, giving some relief to the salaried taxpayers, standard deduction was increased from Rs 40,000 to Rs 50,000.
Tax rebate for resident individuals
Earlier, according to an EY Tax Alert, a tax rebate of Rs 2,500 was provided to individual resident taxpayers whose taxable income was less than Rs 350,000. The tax rebate has now been extended to taxpayers whose taxable income is less than Rs 500,000, resulting in an increase in tax rebate to Rs 12,500. This effectively means that income up to Rs 500,000 is exempt from tax now.
Taxation of Self-Occupied House Property
Earlier, taxpayers who owned two residential houses, which were not self-occupied, were required to impute a notional value for rental income for one property and the value for the other house was taken as zero. However, now, i.e. from FY 2019-20, imputation of notional rental value will apply if a taxpayer owns more than two self-occupied residential houses.
However, deduction available on interest paid on mortgage loan is restricted to Rs 200,000 for both the above residential houses, on which no notional rent imputation is required, says the EY Tax Alert.
Capital Gains on Residential House
Capital gain earned on the sale of residential house was earlier exempt if it was reinvested in one residential house in India. The Interim Budget 2019 provided for a one-time exemption from capital gains which are reinvested in two residential houses in India instead of one residential house. However, to avail the exemption for reinvestment in two residential houses, the capital gains should not exceed Rs 2 crore.