Utilising tax deductions such as investments under Section 80C, NPS contribution, medical insurance, housing loan, taxpayers with gross income up to `9.25 lakh will not have to pay any tax

A major change has been brought in by the Interim Budget by granting full tax rebate to individual taxpayers having taxable annual income up to `5 lakh. Accordingly, taxpayers will not have to pay any tax if their total taxable income does not exceed Rs5 lakh. Factoring in tax deductions for specified investments under Section 80C(Rs1,50,000), NPS contribution (Rs50,000), medical insurance (Rs25,000), housing loan (Rs2,00,000), taxpayers earning gross income up to Rs9,25,000 will not have to pay any tax. For salaried individuals, the threshold of the standard deduction from salary, as introduced by Budget 2018, has been raised from Rs40,000 to Rs50,000, thereby increasing the benefits to the salaried individuals.

Aid has also been imparted to individual taxpayers maintaining their residence at a location away from their home town on account of job or children’s education. Such individuals need not worry about owning houses at two different locations. Prior to this year’s Budget, taxpayers were required to pay income tax on notional rent in respect of more than one self-occupied property, whichever he selects. Considering the genuine hardships faced by such individuals, the government has eased the exemption provisions further and extended such exemption from levy of income tax on notional rent on two house properties self-occupied by them.

Further, a step has been taken to simplify the TDS compliances by revising the withholding tax thresholds. Limits placed on withholding taxes on interest income earned on bank/post office deposits has been raised from Rs10,000 to Rs40,000. This is meant to ease the compliance burden of those who prefer to save rather than invest. Further, the TDS threshold on rent paid for using any property or machinery has been increased from Rs1,80,000 to Rs2,40,000 to provide relief to the small taxpayers.

Real estate gets a boost
The real estate sector gets a sweet deal in the Interim Budget. The government focused on homebuyers and developers with unsold inventory, and addressed some of the key pain points of the sector. The benefit of rollover of capital gains under Section 54 has been increased from investment in one residential house to two residential houses for the taxpayer earning total capital gains of up to Rs2 crore.
This benefit can be availed once in a lifetime. The benefits under Section 80-IBA is being extended for one more year to the housing projects approved till March 31, 2020. The period of exemption from levy of tax on notional rent, on unsold inventories, has been extended from one year to two years, from the end of the year in which the project is completed.

The income tax refund process is going to get even smoother. The government announced that income tax returns will be verified in 24 hours and those who aren’t under scrutiny will get refunds within the day. Verification and scrutiny will be done electronically without any interface between tax authorities and taxpayers.

This year’s Budget has brought several new promises and additions with it. There are a lot of exemptions introduced this year and a lot of planning towards the welfare of the people.