The 2019 Interim Budget Promises a Lot. What Does It Have for You?

Before the interim budget 2019 was announced, a lot of speculations were made about it being beneficial for the salaried employees. And it did not disappoint. Be it increase in the taxable income or the hike in standard deductions; the interim budget brought a host of beneficial provisions.

In the article, we will discuss the key highlights of the interim budget 2019, and what it has in store for salaried employees. Read on to know more.

According to the interim budget, the tax exemption limit has been increased from Rs. 2.5 lakhs to Rs. 5 lakhs. The increase in exemption limit is likely to benefit over 3 crore people in India.

Moreover, employees who have an income of Rs. 6.5 lakh can also get a complete exemption from taxes, considering they have invested in tax-deduction schemes under Section 80C. One such scheme is a ULIP plan. Amongst the many ULIP benefits, the biggest benefit is that ULIPs allow investors to claim tax deductions up to Rs. 1.5 lakhs under Section 80C. Thus, making the income of the investor fall under the tax exemption limit (6.5 lakh – 1.5 lakh = 5 lakh).

In the interim budget, the benefits of capital gains have also been increased under Section 54. Previously, taxpayers were provided tax exemptions on the purchase of a single property from capital gains.

However, after the budget, individuals will be provided tax exemptions for the purchase of two property from capital gains, provided the capital gain does not exceed 2 crores. This provision has come as a great relief for individuals who are selling one property and investing that capital in more than one estate.

TDS limit on both rental an interest income has been increased as per the budget. Previously, the TDS limit on interest income from bank deposits and post office deposits was Rs. 10,000 which has now been raised to Rs. 40,000.

Similarly, the TDS limit on rental income that was Rs. 1.8 lakhs has been increased to Rs. 2.4 lakhs. This provision has come as a significant relief for people who invest in bank deposits and those who give their house on rent.

For those of you who do not know, gratuity is a part of the salary that is provided by an employer to the employee for his/her services. The gratuity benefits received by an individual are taxable as they come under ‘income from salary’ clause.

Previously, the government allowed tax exemptions on gratuity benefits if it was under Rs. 10 lakhs. However, after the interim budget, the limit has been increased to Rs. 20 lakhs.

EPF or Employer Provident Fund is a scheme where an employer and employee pay a specific contribution towards the scheme. And when the employee retires, he/she gets a lump sum amount (both employee and employer’s contribution) with interest.

Previously, the tax exemption limit on the returns from EPF was Rs. 2.5 lakh. However, this limit was increased to Rs. 6 lakhs after the interim budget, 2019.

The standard deduction is the fixed amount that any salaried individual can deduct from his/her gross salary. Previously the standard deduction allowed was Rs. 40,000 which now has been increased to Rs. 50,000.

‘The Takeaway’

The interim budget 2019, has introduced various benefits for salaried employees. So, if you plan your taxes smartly, you can save up to Rs. 10 lakh as tax-free income.

Moreover, you need to keep a close tab on what you've earned, where your money is going and what is your tax liability. For this, you need to maintain a budget and keep all finance-related documents at hand especially your payslips and income tax form 16. Also, you should put your additional, tax-free income to use by investing it into different market-linked instruments to create wealth for your future.

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