- Date : 05/07/2019
- Read: 4 mins
Many announcements were made in the Budget speech, while we still have to look at the allotment of funds, many of these are game-changers
Finance Minister Nirmala Sitharaman presented her maiden Union Budget on July 5. The focus was on providing a boost to infrastructure and foreign investment to combat the signs of a slowdown in the Indian economy. Here is what the budget means for your personal finance.
Tax benefit on home loan for affordable housing
In the Budget 2019, the finance minister has proposed to allow for an additional tax deduction of up to ₹1.5 lakh on the interest payment for home loan repayment for affordable housing. This takes the total deduction to Rs 3.5 lakh. The condition for this deduction is that the value of the property purchased should be under Rs 45 lakh, and the loan should have been availed before March 31, 2020. Therefore, the total deduction allowed for home loans for a self-occupied property comes to Rs 3.5 lakh per annum on interest and Rs 1.5 lakh on the principal amount. This will result into a benefit of around Rs 7 lakh to the middle-class homebuyers over their loan period of 15 years.
Interchangeability of Aadhar and PAN
With an aim to further simplify tax filing, the finance minister proposed that you can file IT returns by simply quoting your Aadhar number. You do not need to have a PAN as well. Moreover, in a bid to make it easier for the taxpayer and reduce the chance of harassment, the budget proposes the introduction of faceless income tax assessment. This would be performed through electronic mode, and thereby remove any human interface.
Tax benefits for CPSE investors
If you invest in Central Public-Sector Enterprises ETFs, you would get tax benefits similar to mutual funds equity linked saving scheme investors. This means there would be a three year lock-in period and an applicable tax deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act.
Tax break on Electric Vehicle
The Budget 2019 also proposes a tax deduction on the interest part of the auto loan taken for buying an electric vehicle. This deduction can be up to ₹1.5 lakh per annum. This makes purchasing an electric vehicle more attractive, thereby helping in reducing the environmental costs of private vehicles.
Higher effective tax rates for the super-rich
While the tax brackets remained untweaked, the Budget proposed to increase the surcharge rates for high net worth individuals earning more than Rs 2 crore per annum. The rates are set to increase from the current 15% to 25% for an income slab of Rs 2 crore to Rs 5 crore and 27% for people earning over Rs 5 crore. This means that the maximum effective tax rate for the super-rich can be up to 42.7%. That is 30% of the income plus 37% surcharge on the tax (11.1%) plus the various cess. The maximum effective tax rate for individuals with annual income between Rs 2 lakh and Rs 5 lakh comes to about 39%.
Pre-filled income tax returns
To make compliance easier, the government is set to introduce pre-filled tax return forms. These will be available for individuals who earn an income from salary, capital gains or interest earned.
NPS withdrawal up to 60% to be tax-free
To make the National Pension Scheme even more attractive, the Budget proposes a tax break on lump sum withdrawal from NPS for up to 60% of the amount saved. So, as you turn 60 you can withdraw 60% of the amount without paying any tax on it. The only condition is that the remaining 40% must be converted to an annuity plan.
Aadhar for NRIs
Any NRI who holds a valid Indian passport can get their Aadhar card issued without the current waiting period of 180 days. This will allow NRIs to get their KYC completed quickly and invest without any unnecessary wait. Moreover, the FM proposed merging NRI portfolio through FPI investment route, which will help get larger pools of NRI capital in a professionally-managed structure.
Finance Minister Nirmala Sitharaman presented her maiden Union Budget on July 5. The focus was on providing a boost to infrastructure and foreign investment to combat the signs of a slowdown in the Indian economy. Here is what the budget means for your personal finance.
Tax benefit on home loan for affordable housing
In the Budget 2019, the finance minister has proposed to allow for an additional tax deduction of up to ₹1.5 lakh on the interest payment for home loan repayment for affordable housing. This takes the total deduction to Rs 3.5 lakh. The condition for this deduction is that the value of the property purchased should be under Rs 45 lakh, and the loan should have been availed before March 31, 2020. Therefore, the total deduction allowed for home loans for a self-occupied property comes to Rs 3.5 lakh per annum on interest and Rs 1.5 lakh on the principal amount. This will result into a benefit of around Rs 7 lakh to the middle-class homebuyers over their loan period of 15 years.
Interchangeability of Aadhar and PAN
With an aim to further simplify tax filing, the finance minister proposed that you can file IT returns by simply quoting your Aadhar number. You do not need to have a PAN as well. Moreover, in a bid to make it easier for the taxpayer and reduce the chance of harassment, the budget proposes the introduction of faceless income tax assessment. This would be performed through electronic mode, and thereby remove any human interface.
Tax benefits for CPSE investors
If you invest in Central Public-Sector Enterprises ETFs, you would get tax benefits similar to mutual funds equity linked saving scheme investors. This means there would be a three year lock-in period and an applicable tax deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act.
Tax break on Electric Vehicle
The Budget 2019 also proposes a tax deduction on the interest part of the auto loan taken for buying an electric vehicle. This deduction can be up to ₹1.5 lakh per annum. This makes purchasing an electric vehicle more attractive, thereby helping in reducing the environmental costs of private vehicles.
Higher effective tax rates for the super-rich
While the tax brackets remained untweaked, the Budget proposed to increase the surcharge rates for high net worth individuals earning more than Rs 2 crore per annum. The rates are set to increase from the current 15% to 25% for an income slab of Rs 2 crore to Rs 5 crore and 27% for people earning over Rs 5 crore. This means that the maximum effective tax rate for the super-rich can be up to 42.7%. That is 30% of the income plus 37% surcharge on the tax (11.1%) plus the various cess. The maximum effective tax rate for individuals with annual income between Rs 2 lakh and Rs 5 lakh comes to about 39%.
Pre-filled income tax returns
To make compliance easier, the government is set to introduce pre-filled tax return forms. These will be available for individuals who earn an income from salary, capital gains or interest earned.
NPS withdrawal up to 60% to be tax-free
To make the National Pension Scheme even more attractive, the Budget proposes a tax break on lump sum withdrawal from NPS for up to 60% of the amount saved. So, as you turn 60 you can withdraw 60% of the amount without paying any tax on it. The only condition is that the remaining 40% must be converted to an annuity plan.
Aadhar for NRIs
Any NRI who holds a valid Indian passport can get their Aadhar card issued without the current waiting period of 180 days. This will allow NRIs to get their KYC completed quickly and invest without any unnecessary wait. Moreover, the FM proposed merging NRI portfolio through FPI investment route, which will help get larger pools of NRI capital in a professionally-managed structure.
