Finance Minister Piyush Goyal kept the country guessing on income tax rates in the first half of his Interim Budget speech. When the announcements finally came, the salaried and the middle class breathed a sigh of relief.
"Reducing the tax burden on middle class has always been our priority ever since our Government took over in 2014," the Finance Minister stated before announcing reductions in the income-tax rate. Here's how you stand to make more in FY2019-20 if you're in the right tax bracket.
As the Minister explained,
“Additional deductions such as interest on home loan up to Rs 2 lakh, interest on education loans, National Pension Scheme contributions, medical insurance, medical expenditure on senior citizens etc, persons having even higher income will not have to pay any tax.”
This move is expected to provide income-tax benefits of Rs 18,500 crore to an estimated 3 crore middle-class tax payers, including salaried individuals, small business owners, traders and senior citizens.
Further, the Minister proposed an income-tax exemption on notional rent for a second self-occupied house. Currently, income tax on notional rent is payable if one has more than one self-occupied house. This will benefit families who have two self-occupied homes on account of their job, children’s education, care of parents, etc.
In addition, capital gains of up to Rs 2 crore made from the sale of immovable property can now be invested in two residential houses as against the current practice of exempting such income from tax if it is invested in one house within a year.
Piyush Goyal justified including tax proposals in an Interim Budget: "Though as per convention, the main tax proposals will be presented in regular budget, small taxpayers especially middle class, salary earners, pensioners and senior citizens need certainty in their minds at the beginning of the year about their taxes."
The minister concluded his speech by saying,
“This is not merely an Interim Budget, but a medium of the country's development journey. All the transformation that we are witnessing, is because of the passion of the people of our nation. The credit goes to them only. Development has become a mass-movement during the period of our Government.”