Finance minister Nirmala Sitharaman announced the maiden Budget for the Narendra Modi-led government on Friday in Lok Sabha. Sitharaman said that Aadhaar card and PAN card are interchangeable to file the income tax returns. The government also hiked tax on petrol, diesel and import duties on gold and it also levied additional surcharge 3 per cent for high net worth individuals (HNIs) with annual income between Rs 2 crore to Rs 5 crore a year.
Let us understand how the budget proposals are going to impact your personal finance:
Introducing home loan interest benefit for affordable housing Personal Finance
Budget 2019 proposed to increase the interest deduction on home loans as taken for the affordable housing by Rs 1.5 lakh which makes the total deductions to Rs 3.5 lakh per annum. The only condition to avail this benefit is the fact that the house should not be valued more than Rs 45 lakh and the loan taken up to March 31, 2020. Thus, it will provide an overall benefit of Rs 7 lakh over a loan period for 15 years.
As you must be aware, the interest paid on your home loan is allowed as a deduction to the extent of Rs 2 lakh towards your self-occupied property apart from the principal amount of Rs 1.5 lakh u/s 80C.
No need to have PAN for filing I-T return, you can quote Aadhaar number as well
Aiming towards simplifying the tax administration and for bringing more transparency, the finance minister proposed the inter-changeability between PAN and Aadhaar. So, those without PAN can still file their tax returns by simply quoting their Aadhaar number.
Faceless income tax assessment
In order to reduce taxpayer’s harassment, the government will bring the faceless income tax assessment via electronic mode thereby removing human interface completely.
Tax breaks for buying electric vehicles
The government announces Rs 1.5 lakh tax deduction for the interest paid on the loans taken for the purchase of electric vehicles to boost the EV segment overall.
Retail investors in CPSE to get the tax benefits
Those investing in CPSE i.e. central public-sector enterprises ETFs will get similar benefits what a mutual funds ELSS (Equity linked savings schemes) provides. At present, ELSS investments comes with a lock-in period of 3 years and gives you a tax deduction up to Rs. 1.50 lakh u/s 80C of the Income Tax Act.
Increase in the surcharge rates, rich will pay more
Budget proposes to increase the current surcharge rates, so the current rate of 15 percent is set to rise to 25 percent for an income slab of Rs 2 crore to Rs 5 crore and the same 15 percent will become 37 percent for people earning above Rs. 5 crore. This will make the super-rich pay a tax at the rate of 42.7 percent which is higher than the US where the same is 40 percent. They have to pay Rs 30 as a tax on every Rs 100 earned by them and over and above another 37 percent on the tax of Rs 30, which comes to Rs 11.1 and then add the various cess and the maximum tax rate would come to 42.7 percent. Similarly, the highest tax rate for those earning between Rs 2 and Rs 5 crore would be around 39 percent.
Pre-filled income tax returns to come out soon
For the ease of compliance procedure, the government will come out with the pre-filled tax returns form which will be available for the people earning income from salary, capital gains or interest income.
Lump sum withdrawal up to 60 percent from NPS will be totally tax-free
This proposal was approved by the cabinet earlier and Budget 2019 proposed to make this 60 percent lump sum withdrawal from NPS to be totally tax free at the time of maturity. So, a person on the maturity at the age of his or her 60 would be able to withdraw up to 60 percent of their NPS corpus without paying any tax. The balance 40 percent has to be compulsorily turned in to an annuity plan.
Aadhar for NRIs
The government proposes to issue Aadhaar card to all the NRIs having Indian passports without the worry of waiting for 180 days. This will help NRIs get KYC done quickly and invest smoothly as well.