Budget 2019-20 – Income Tax Benefits & Changes

Full Budget 2019-20 was announced by Finance Minister Nirmala Sitharaman today. As it is the first budget of newly elected NDA government expectation from budget 2019-20 was very high. Middle-class people were expecting tax slab change in new budget 2019-20. However, budget 2019-20 was turn out to be a disappointment for the middle class and taxpayers for Income Tax Slab change.

Only a few changes were made in the budget proposal as major changes were already announced in interim budget 2019-20. Here is a detail of key income tax benefits & changes announced in Budget 2019-20.

Also Read – Income Tax Slabs FY 2019 | Budget 2019-2020 | Review

Budget 2019-20 – Income Tax Benefits & Changes

# Income Tax Slab for FY 2019-20

Income Tax Slab Rate for FY 2019-20 is given below. As such, there is no change with respect to the income tax slab. However, the tax liability for income up to 5 Lakh will be zero.

Budget 2019-20 - Income Tax Slab

The earlier section 87A benefit of Rs.2500 is now increased to Rs.12500. This means if your income is up to 5 Lakh you can make use of section 87A and enjoy tax-free income up to 5 Lakh.

# Additional Tax deduction of 1.5 Lakh for Affordable Housing

Now you can enjoy additional tax deduction benefit of 1.5 Lakh on home loan interest payment. This benefit is on the top of the existing 2 lakh tax benefit applicable on interest payment. This means you can avail up to 3.5 Lakh deduction for the home loan interest payment. The stated benefit is applicable for the property cost up to 45 Lakh under section 80EE. This benefit is applicable only up to 31st March 2020.

# Income Tax Deduction on Loan for Electronic Vehicle purchase

A new tax deduction up to 1.5 Lakh is proposed on the interest payment for the loan taken to purchase an electronic vehicle. The objective of introducing this deduction is to increase usage of Electronic Vehicle.

# CPSE ETF as ELSS alternative

The government will introduce a new Central Public Sector Enterprise ETF. This CPSE ETF will act as an alternative to ELSS Tax saving mutual fund. The government will divest shareholding in selected state-owned companies using this.

# 2% TDS on Cash Withdrawal

Cash withdrawal above 1 Cr in a year from a bank account will attract 2% TDS. This means cash withdrawal for the super-rich will be difficult.

# Pre Filled ITR Forms

Pre-filled ITR forms will be a reality soon. The taxpayer will get pre-filled ITR mentioning salary income, interest income on FD, capital gain from securities, dividend income etc. These details will be captured from the bank, stock exchange, form 26AS. This will reduce the time required for filing ITR. It will also help the taxpayer to reduce error while filing ITR form.

# Interchangeability of PAN and Aadhaar for ITR

PAN and Aadhaar either of them now can be used to file ITR. This means any taxpayer who does not have PAN card can use Aadhaar to file an income tax return. Aadhaar number can be interchangeably used wherever a person is required to quote PAN.

# Faceless assessment

A new concept of faceless assessment will be introduced. The aim of a faceless assessment is to cut down the interaction between taxpayer & income tax officer. Faceless assessment or scrutiny means that the assessing officer will not know the identity of the taxpayer and would use technology to scrutinize details of the taxpayer.

Income Tax Deduction up to 8 Lakh for FY 2019-20

A taxpayer will be able to get a tax deduction up to 8 Lakh in FY 2019-20. The detailed breakup is given below.

  • 80C Tax Benefits – 1.5 Lakh
  • Home Loan Interest – 3.5 Lakh
  • Standard Deduction – 0.5 Lakh
  • NPS Investment – 0.5 Lakh
  • Health Insurance Self – 0.25 Lakh
  • Health Insurance Parents – 0.30 Lakh
  • Electrical Vehicle Loan Interest – 1.5 Lakh

What is your take on Budget 2019-20 Tax benefits?

Do share your views in the comment section given below.

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