Budget 2019 : Highlights

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Budget 2019: Highlights

Taxation

  • Standard deduction u/s 16 has been increased from Rs. 40,000/- to Rs.50,000/-. This will benefit all the salaried employees.
  • Rebate u/s 87A increased to Rs.12500/- for all individuals having taxable income up to Rs.5,00,000/- (Click here to know more about this amendment)
  • Deduction u/s 194A related to TDS on Interest other than securities increased from Rs.10,000/- to Rs.40,000/-
  • Limit for deducting tax at source  u/s 194I (TDS on Rent) increased from existing Rs.1,80,000/- to Rs.2,40,000/-
  • The benefit of Self Occupied Property u/s 23 is extended to two residential properties. This is applicable to properties owned by all the Individual and HUF assessees. Additionally, deduction u/s 24 in respect of interest on money borrowed for both the property is restricted to Rs.2 Lakhs only.
  • For individuals holding 2 residential properties, were required to pay tax on the notional rent for one property. Now, the notional rent is exempt on the second house too.
  • The benefit of exemption u/s 54 (Long term Capital gain on sale of the immovable property not exceeding Rs.2 crores), the assessee may now purchase or construct two residential properties for claiming the said exemption. This exemption can be availed only once in a lifetime and if Capital Gain exceeds Rs.2crores then above benefit is not applicable.
  • Deduction u/s 80IBA ( for builders of Affordable Housing Schemes ) is extended further by one-year upto 31st March 2020.
  • For REAL ESTATE Developers: Period of the holding of unsold inventory of flats increased from 1 year to 2-year u/s 23(b) of the Income Tax Act 1961. Accordingly, notional rent not taxable for 2 years on unsold flats instead of 1 year earlier
  • Health & Education Cess maintained at 4% for all categories of Tax payers;
  • No Changes in Income Tax Slabs or tax rates for the Individuals, Women, Senior Citizens, HUFs, Co-operative Societies,
    Local authorities or corporates.
  • No Change in dual rate of surcharge notified for the domestic companies’ unchanged at 7% (Taxable Income exceeding Rs.1
    Crores but less than 10 Crores) and 12% in other cases.
  • No change in a dual rate of surcharge notified for the companies other than domestic companies’ viz. 2% (Taxable Income exceeding
    Rs.1 Crores but less than 10 Crores) and 5% in case of others continued. Surcharge unchanged from 12% in other cases when tax is payable u/s 115O, 115QA, 115R, 115TA or 115TD as the case may be continued.
  • No change in Minimum threshold limits of Income Tax Exemptions. The deduction limit under section 80C remains the same at Rs. 1.5 lacs.
  • FM mentioned that in the next two years, all the Income Tax assessments (till scrutiny level will) be handled online without any face to face meeting or intervention to keep anonymity.

LABOUR LAW AND WORKERS

  • The New Pension Scheme (NPS) has been liberalized. The contribution of the employee is kept at 10%, the Government contribution increased from 10% to 14%
  • Maximum ceiling of the bonus given to the laborers has been increased from Rs 3,500 pm to Rs 7,000 pm and the maximum ceiling of the pay has been increased from Rs 10,000 pm to Rs 21,000 pm.
  • The ceiling of payment of gratuity has been enhanced from Rs.10 lakhs to Rs 20 lakhs
  • The ceiling of ESI’s eligibility cover (ESIC) has been increased from Rs. 15,000 pm to Rs. 21,000 pm
  • In the event of the death of a laborer during service, the amount to be paid by EPFO has been enhanced from Rs. 2.5 lakh to Rs. 6 lakh
  • ‘Pradhan Mantri Shram-Yogi Maandhan’ Yojana has been introduced for the unorganized sector workers with monthly income upto Rs.15,000. Under this pension scheme shall an assured monthly pension of Rs. 3,000 will be provided from the age of 60 years on a monthly contribution of a small affordable amount during their working age. The Government will deposit equal matching
    share in the pension account of the worker every month.  For example, a worker joining the yojana at the age of 29 years will have to contribute only Rs. 100 per month till the age of 60 years. A worker joining the pension yojana at 18 years, will have to contribute as little as Rs. 55 per month only to receive the pension of monthly Rs. 3,000. This scheme is applicable from the current year.

OTHER IMPORTANT PROVISIONS & ALLOCATIONS

  • “Pradhan Mantri Kisan Samman Nidhi” programme has been announced. Under this programme, vulnerable landholding farmer families, having cultivable land upto 2 hectares, will be provided direct income support at the rate of Rs.6,000 per year. This will be provided in three installments. The programme is applicable from Current year.
  • 2 % interest subvention will be granted for MSMEs registered under GST.
  •  2 % interest subvention granted to farmers pursuing animal husbandry and farmers affected by the natural calamities. Further 3%
    relief if the repayment is made on a timely basis.
  • The Single window clearance will be made available to India filmmakers. The Anti-camcording provision will be introduced to
    Cinematography Act to combat film piracy.
  • The Defense Sector has been allocated more than 3 Lakhs crores, highest ever and the FM ready to allocate more incase needed.
  • The capex budget for Railway’s sector is set at Rs. 1.6 lakh crore.
  • The Custom duty has been abolished from 36 Capital Goods.
  • Allocation of Rs. 19,000 crore proposed for Gram Sadak Yojana
  • National Kamdhenu Aayog for cows has been allocated Rs. 750 crores as part of National Gokul Mission.
  • The 4R approach has been implemented to ensure clean banking – Recognition, Resolution, Recapitalization and Reforms. The
    PCA restriction has been abolished from 3 major banks.
  • India is poised to become $ 5 trillion economy in the next 5 years, $ 10 trillion economy in next eight years.
  • Rs. 1 lakh digital villages proposed in next 5 years.
  • The fiscal deficit target has been brought down to 3.4% in 2018-19. The Current Account deficit is likely to be 2.5% of GDP.

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About CA Janhavi Phadnis 78 Articles
Chartered Accountant and financial consultant. She has worked with corporates for 14 years with expertise in Forex-Treasury, Accounting, and Corporate Tax. She can be contacted at info.financepost@gmail.com

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