Income tax changes expected from Nirmala Sitharaman's maiden budget
New Delhi, July 04: As Finance Minister Nirmala Sitharaman is all set to present her maiden Union Budget for financial year 2019-2020 on July 5, expectations are high among the common man.
While it is the middle-income group with high expectations from Modi government 2.0 to lower the tax slabs, tax experts want the Finance Ministry to increase the overall tax exemption threshold or come up with some tax breakup slabs to reduce the strain on their household expenditure.
While the Interim Budget presented by the then FM Piyush Goyal in February announced big income tax relief for the common man, the middle-class is looking at FM Nirmala Sitharaman to take this a step further.
Here are some income tax changes to expect in the upcoming Budget 2019-20 by Modi 2.0 government.
1. Higher tax exemption limit
Since a full tax rebate up to Rs 5 lakh was introduced under Section 87A in the interim budget, it is unlikely that there will any further alteration. But citizens want the government to increase the tax exemption threshold from the existing Rs 2.5 lakh to at least Rs 3 lakh.
2. Higher income tax deduction
The income tax deduction allowed under Section 80(C), currently at Rs 1.5 lakh, could be raised to Rs 2 lakh or above. This will allow people to save more tax on investments made under Section 80(C) of the Income Tax Act. Investments towards PPF, EPF, NSC, fixed deposits and NPS qualify for deduction under Section 80(C).
3. High Deduction of interest on home loans:
As the real-estate sector has been affected negatively because of a demand slowdown, the Centre might consider increasing the limit of deduction for payment of interest on housing loans from Rs 2 lakh to Rs 3 lakh. At present, people can claim a maximum deduction up to Rs 2 lakh under Section 24B of the Income Tax Act.
4. Reintroduction of investment in Tax Saving Infrastructure Bonds:
The government might consider re-introduction of the deduction for investment in infrastructure bonds up to Rs 50,000. The deduction for investment on such bonds was given to the extent of Rs 20,000 in FY 2010-11 and FY 2011-12.
5. Tax benefits towards healthcare
There are high probabilities that the government will increase deduction under tax saving instruments available in healthcare. The cap could be increased from the present Rs 25,000, applicable to individuals aged below 60 years, under Section 80(D). The concession can also be increased under Section 80(D) for people more than 60 years of age.