1. Home
  2. News

Latest on Budget 2019: Five Income Tax Changes that You Can Expect on 5th July; Read Details

As Nirmala Sitharaman, Finance Minister is ready to announce her maiden budget this Friday – 5th July 2019 - expectations among Indians are already sky high.

Abha Toppo
budget 2019

As Nirmala Sitharaman, Finance Minister is ready to announce her maiden budget this Friday – 5th July 2019 - expectations among Indians are already sky high.

Most of the demands that have been proposed in the run-up to 5th July pertain to lower taxation, particularly those belonging to the middle-income group. These people have asked the government to either raise the overall tax exemption threshold or bring in tax breaks to decrease strain on their household expenses.

While the Centre may not consider all their requests, it is expected to take certain steps to ease taxation on the middle-income group. Economists believe that not many changes will be introduced in taxation due to the present economic situation.

But, tax experts said the Centre may bring in some sops to increase demand and accelerate economic growth. Here are a few probable income tax changes that could be announced by the finance minister.

Income tax exemption limit

Given that a full tax rebate up to Rs 5 lakh was introduced under Section 87A in the interim budget 2019 (February), it is doubtful that there will any other modification in the exemption. But citizens & many industry bodies want the Centre to raise the tax exemption threshold from the existing Rs 2.5 lakh to Rs 3 lakh.

Many people are hoping that the government will make changes to increase the limit but it would lead to a cut in the current tax base as more people will be exempted from paying income tax. Taking into account that the Centre wants to increase the country's tax base, such a move is highly unlikely.

High income tax deduction

Those exempting an increase in exemption limit will end up being disappointed but the government could make them happy by introducing higher deductions under several sections of the Income Tax Act. The income tax deduction permitted under Section 80(C), presently at Rs 1.5 lakh, may be raised to Rs 2 lakh or above.

This will let people save more tax on investments made under Section 80(C) of the Income Tax Act. Investments towards EPF, PPF, NSC, FDs and NPS qualify for deduction under Section 80(C).

High deduction on home loans

As the real-estate sector has been affected negatively because of a demand slowdown, the Centre could offer more tax benefits to buyers & provide a much-needed boost to the sector. As per latest details, people can claim a maximum deduction up to Rs 2 lakh under Section 24B of the Income Tax Act.

Economists said the government may increase this cap further to incentivise buying housing properties for increasing demand in the sector. An individual can claim this deduction from the year in which the construction of the house is finished.

Additional tax benefits towards healthcare

There are high probabilities that the government will increase deduction under tax saving instruments available in healthcare. Industry bodies have already asked the Centre to raise tax saving under Section 80(D) of the Income Tax Act.

The cap could be increased from the present Rs 25,000, applicable to individuals aged below 60 years, under Section 80(D). The concession can also be increased under Section 80(D) for people more than 60 years of age. The existing limit of exemption for people above 60 years is Rs 50,000.

Re-introduction of Tax-free bonds

One of the main goals of the Centre in the budget will be to increase infrastructure projects as it holds key to enhancing job growth and pushing up demand.

In such a situation, it would not be a surprise if the tax-free bonds make a comeback. The instrument will help the Centre raise capital via government entities for infrastructure projects. Such bonds are known as 'tax-free' as the interest earned on them is not taxable.

While these bonds have a long period of maturity - 10 years and above - they are secure than many other options available in the market.

So let's keep our fingers crossed and wait for 5th July !!!

International No Diet Day 2024 Quiz Take a quiz

Related Articles

Share your comments
FactCheck in Agriculture Project

Subscribe to our Newsletter. You choose the topics of your interest and we'll send you handpicked news and latest updates based on your choice.

Subscribe Newsletters