Budget 2019 live: Expected tax changes in Union Budget today
New Delhi : Copies of Budget 2019-20 has been security checked and Finance Minister Piyush Goyal is all set to present the much-awaited session today. Today, the government may announce some tax relief for the middle or lower income groups. But some tax experts don’t expect the finance minister to announce sweeping changes on the income tax front. Let's see what comes up at the end of the day. Till the big leaders make final decisions, let us check what common Indians are expecting from Budget 2019 on personal tax front:
Basic exemption limit may be raised from Rs. 2.5 lakh to Rs. 3 lakh for individuals less than 60 years, says Kuldip Kumar, partner at PwC India. For individuals 60 years or more but less than 80, the limit may go up to Rs 3.5 lakh from Rs 3 lakh, he says.
Women taxpayers may get higher basic exemption or even parity with senior citizens, he adds. Finance Minister Arun Jaitley in the first budget of this NDA government in 2014 had raised the tax exemption limit to Rs. 2.5 lakh from Rs. 2 lakh.
To incentivise savings, the government may also increase the Section 80C deduction limit. “The limit of Rs.1.5 lakh under Section 80C was last revised in Budget 2014-15. We can expect the government to consider revising this limit. With the due passage of time, this limit no longer holds good. An increase in Section 80C limit will help provide more room for tax saving," says Abhishek Rastogi, partner at Khaitan & Co. Kuldip Kumar of PwC expects the Section 80C limit to go up to Rs. 2 lakh
A rationalisation of income tax rates could also be on the cards. “Currently, there is a steep jump from 5% to 20% for income between Rs. 5 lakh to Rs. 10 lakh. Some rationalization is expected here. A decision may also be taken to lower the highest personal income tax rate from the existing 30% to 25%," says Rastogi. Currently, income up to Rs. 2.5 lakh is exempt from personal income tax. Income between Rs. 2.5 and Rs. 5 lakh attracts 5% tax, while that between Rs. 5 lakh and Rs. 10 lakh is levied with 20% tax. Income above Rs. 10 lakh is taxed at 30%
Industry body CII has recommended that income below Rs. 5 lakh should be exempt while that between Rs. 5 lakh and Rs. 10 lakh should be taxed at a lower rate of 10%. For those having income between Rs. 10 lakh and Rs. 20 lakh, says CII, the tax rate should be 20%, and those who earn over Rs. 20 lakh should be taxed at 25%.
The government may also offer more tax benefits on housing loans. “Considering a delay in housing projects and also the inching up of interest rates, interest on housing loan for a self-occupied house property, which is limited to Rs. 2 lakh, may be enhanced to Rs. 2.5 lakh and the set-off cap of adjusting loss from house property against other heads of income may also be accordingly raised from Rs. 2 lakh to Rs. 2.5 lakh," says Kumar of PwC.
In Budget 2019, the government may also formalize the recent changes announced in the NPS or National Pension Scheme, says Divya Baweja of Deloitte India. The changes are expected to come into force from April 1, he adds. The Union Cabinet in its meeting on 6 December had approved a proposal to increase the tax exemption limit for lump sum withdrawal from NPS on exit to 60%.
