No tax on income up to Rs 5 lakh, says Finance Minister

Finance Minister Piyush Goyal announced raising of tax exemption on income up to Rs 5 lakh per annum. Earlier, a 5 per cent tax was levied on such income. He said if the individual tax payers makes investment of up to Rs 1.5 lakh in provident fund, the total exemption limit would be up to Rs 6.5 lakh per annum.

“Individual taxpayers having annual income upto Rs 5 lakhs will get full tax rebate. Individuals with gross income up to 6.5 lakh rupees will not need to pay any tax if they make investments in provident funds and prescribed equities,” said Goyal.

The finance minister proposed to increase the threshold of tax deduction at source (TDS) on rental income from Rs 1.8 lakh to Rs 2.4 lakh. TDS threshold on interest on bank and post office deposits has been raised from Rs 10,000 to Rs 40,000 in the Budget 2019.

“Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 2 crore rupees; can be exercised once in a lifetime. India became one common market with implementation of GST,” said Goyal.

The finance minister said, “This is not just an Interim Budget, this is a vehicle for the developmental transformation of the nation.”

The Finance Minister has announced the raising for gratuity limit from Rs 10 lakh to Rs 30 lakh. He also announced the creation of a new pension scheme for employees in the unorganised sector. The Finance Minister talked up the various schemes that the government had undertaken to reduce the burden of income tax on the middle class.

And then came the benefits. All those earning less than Rs 5 lakh will get a full tax rebate. There is a reduction in standard deduction. There is tax benefits for interest earned on bank deposits and tax benefits for home sales.

Among the measures expected are: a widening of the income tax exemption thresholds as well as the possible raising of threshold for deduction on investments.