Budget 2019 for Salaried Employees and Middle Class People

The last budget of the current Government in power at the centre was presented on 1^st February 2019.  This is an interim budget for this year 2019 and the full budget will be presented in by the new government elected in the forthcoming Lok Sabha Election.

Meanwhile, let’s look at the important announcement for the salaried employees and the middle class people who usually gets affected by the budgets.

For Salary Income

There is an increase of Rs.10000/- of Standard Deduction has been announced.  The present standard deducted is Rs.40000/- and it has been increased to Rs.50000/- in lieu of medical reimbursement and transport allowance.  Earlier the medical reimbursement of Rs.15000/- and transport allowance of Rs.19200/- per annum.  Employees need not to provide any proof for availing standard deduction. 

Income Tax Rebate Increased

Availability of Income tax rebate at 5% for the total income of Rs.3,50,000/- has been increased to Rs.5,00,000/-.  This tax rebate is available after all deductions from total income.  So, the available total income tax rebate for the financial year 2019-20 is Rs.12500/- from earlier Rs.5000/-.

Capital Gain Tax Exemption for the Second Residential House Property

The tax exemption for capital gain under Section 54 of the Income Tax Act was available for the investment in only one residential property.  Now you can invest in two residential properties to avail the tax exemption for the capital gains up to Rs.2 Crores.  This can be availed only once in a lifetime of a person as per the Budget.

TDS on Bank Deposits and Post Office Savings

There will be no TDS on the interest earned from savings account, fixed deposits, recurring deposits and other deposits in banks and post offices up to Rs.40000/-.  The same has been increased from Rs.10000/- earlier.

TDS limit for rent payment is also increased from Rs.1,80,000/- to Rs.2,40,000/- per annum.

Income from House Property

For the purpose of income computation for house property, there will be no income tax on notional rent for the second self occupied house.  Earlier, when a person owns two residential house properties, only one house property was considered as self-occupied.  Tax was paid on the second house on notional rent basis even it was not let out.  Now, the same is exempted from tax.  The exemption is available only when the rent is calculated on notional basis otherwise, if you actually let out the property, then tax is to be paid on the rent actually received.