Individuals having annual taxable income of up to Rs 5 lakh will not have to pay any income tax, said Finance Minister Piyush Goyal on Friday in his Interim Budget 2019 speech.
Further, standard deduction has been raised from Rs 40,000 to Rs 50,000, which will benefit 30 million salaried individuals.
If an individual invests in the specified tax saving schemes of the government, the effective tax-free income limit will be Rs 6.5 lakh a year, while it may go further up with additional avenues like NPS, medical insurance and home loan interest payment.
The proposal will benefit 30 million middle-class taxpayers, Goyal said. Doubling the threshold exemption limit will increase the burden on the exchequer by Rs 18,500 crore.
Goyal proposed to increase tax deducted at source (TDS) limit on rent income to Rs 2.4 lakh from the current Rs 1.80 lakh. He also announced that the TDS threshold on interest from bank and post office deposits will be raised from Rs 10,000 to Rs 40,000.
The proposal will benefit senior citizens and small depositors who depend upon income from interest on deposits in banks and post offices, he said. Under the current norms, they are required to seek a refund on tax deducted on interest income beyond Rs 10,000 per annum.
The Budget also proposed to exempt tax on notional rent for unsold housing units for two years.
Goyal also proposed that benefit of rollover of capital gains tax be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains of up to Rs 2 crore. However, it can be exercised once in a lifetime, he added.
The government also exempted tax on notional rent on a second self-occupied house.
The Income Tax department will move towards faceless assessment and verification of returns, Goyal said Friday.