Money Saved is Money Earned
The new financial year has just begun, and so has new tax rules that kicked in First April 2019. As you must be getting on with your tax as well as financial planning now, you must be aware of all the changes proposed in Budget 2019 that will apply in current financial year. Following are the changes in tax rules and the tasks that you need to perform at the beginning of the financial year:
1. Tax rebate increased: Till last year if you had a taxable income of Rs 3.5 lakh, you got a tax rebate of Rs 2,500 under section 87A. From FY20 onwards, if you have a taxable income of less than Rs 5 lakh, you won’t be paying any taxes. The rebate limit has been increased to Rs 12,500 from 2,500.
2. Standard deduction limit increased: Standard deduction of Rs 40,000 was introduced in 2018 in place of medical reimbursement and conveyance allowance. This limit has been increased to Rs 50,000. This deduction is only available to salaried class and pensioners.
3. No notional rent on second self-occupied house property: Earlier, if you had two self-occupied houses, one was deemed to be let out and tax was calculated on the basis of a notional rent. In the interim budget 2019, individuals have been exempted from paying any notional rent on second house. “This will benefit individuals who have been paying taxes on the notional rent for the second house property,” says Homi Mistry, Partner, Deloitte India.
4. TDS deduction limit raised : Till last year bank/ post office could deduct TDS in case the interest earned for the year from deposits was Rs 10,000. This limit has been raised to Rs 40,000.
5. Changes in Section 54: Earlier, if you had capital gains from selling a house property you could utilise it for buying one house property to get the tax exemption. From this year onwards, you can utilise it for buying two houses. “However, the capital gain amount should not exceed Rs 2 crore. This benefit can be availed by an assessed only once in his lifetime.
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