In an election year, the central budget gets bifurcated into two parts - a vote-on-account and the full budget. While the goodies are generally packed into the first basket having an eye on the forthcoming ballot game, the latter gets the not-so-sweet or bitter pills. The Central Budget of fiscal 2019-20 presented and tabled by the newly appointed Finance Minister (FM) Nirmala Sitharaman on July 5, 2019, was no exception.
Personal tax
There is essentially no change in tax slabs or rates for individual taxpayers in the basic exemption limit and in the standard deduction cap. The basic exemption threshold was increased to 5 lakh of taxable income and the standard deduction cap was hiked from 10000 to 50000. These were parts of the interim budget proposal. The only change the FM made is to burden the higher income categories by putting additional surcharge of 3% in the 2-5 crore category and 6% in the above 5 crore income category. This translates into effective tax rates of 39% and 42.74% (30% basic tax + 7.5 or 11.5 % surcharge + 4 % cess). However, this hike is likely to have only a moderate effect as during the 2017 fiscal, only about 80000 people declared income of 1 crore and above. An estimate shows that the tax receipt from the hike will be well below 8000 crore in this fiscal.
An additional interest deduction of 1.5 lakh per annum has been allowed on loan taken for purchase of residential property valued up to 45 lakh. This is expected to generate demand from first-time home buyers. This adds up to the current deduction limit of 2 lakh interest for loans on affordable houses. However, the time limit for availing such loans has been capped at March 31, 2020 which is a major catch.
Denne historien er fra July 16-31, 2019-utgaven av BUSINESS ECONOMICS.
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Denne historien er fra July 16-31, 2019-utgaven av BUSINESS ECONOMICS.
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