While the income tax slab rates were kept unchanged, Finance Minister Nirmala Sitharaman on Friday announced a number of new income tax proposals while presenting Budget 2019.
“My tax proposals will aim to stimulate growth, incentivise affordable housing, and encourage start-ups by releasing entrepreneurial spirits. It will also be geared towards promoting digital economy. I aim to simplify tax administration and bring greater transparency,” said Sitharaman in her maiden Budget speech.
Here are the five key changes related to income tax in Budget 2019:
1) Interchangeability of PAN and Aadhaar: For ease and convenience of taxpayers, the government has proposed to make PAN and Aadhaar interchangeable and allow those who do not have PAN to file Income Tax returns by simply quoting their Aadhaar number and also use it wherever they are required to quote PAN.
2) Additional tax deduction on interest on home loans: The government has proposed to allow an additional deduction of up to Rs 1.5 lakh for interest paid on home loans borrowed up to March 31, 2020, for purchase of an affordable house valued up to Rs 45 lakh. Therefore, a person purchasing an affordable house will now get an enhanced interest deduction up to Rs 3.5 lakh. This will translate into a benefit of around Rs 7 lakh to middle-class home-buyers over their loan period of 15 years.
3) Incentive to purchase electric vehicle: In order to incentivise purchase of electric vehicles by individuals, the government has proposed to provide deduction of an amount up to Rs 1.5 lakh for interest paid on loans taken for the purchase of electric vehicles. The loan is required to be taken on or before March 31, 2023.
4) TDS on cash withdrawal from banks: In order to discourage large amount of cash withdrawal from bank accounts, the government has proposed to provide for tax deduction at source at the rate of 2 per cent on cash withdrawal by a person in excess of Rs 1 crore in a year from his bank account. Some business models, where large cash withdrawal is a necessity, are proposed to be exempted.
5) Super-rich to fork out more: The government has proposed to enhance surcharge on individuals having taxable income from Rs 2-5 crore and Rs 5 crore and above so that effective tax rates for these two categories will increase by around 3 per cent and 7 per cent, respectively.