What did middle class salaried people get in this Budget?
Individual taxpayers having taxable annual income up to 5 lakhs will get full tax rebate and therefore will not be required to pay any income tax. As a result, even persons having gross income up to 6.50 lakhs may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc. In fact, with additional deductions such as interest on home loan up to 2 lakh, interest on education loans, National Pension Scheme contributions, medical insurance, medical expenditure on senior citizens etc, persons having even higher income will not have to pay any tax. This will provide tax benefit of 18,500 crore to an estimated 3 crore middle class taxpayers comprising self employed, small business, small traders, salary earners, pensioners and senior citizens.
For salaried persons, Standard Deduction is being raised from the current 40,000 to 50,000. This will provide additional tax benefit of 4,700 crore to more than 3 crore salary earners and pensioners.
Currently, income tax on notional rent is payable if one has more than one self-occupied house. Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children’s education, care of parents etc. I am proposing to exempt levy of income tax on notional rent on a second self-occupied house.
TDS threshold on interest earned on bank/post office deposits is being raised from 10,000 to 40,000. This will benefit small depositors and nonworking spouses. Further, the TDS threshold for deduction of tax on rent is proposed to be increased from 1,80,000 to 2,40,000 for providing relief to small taxpayers.
The benefit of rollover of capital gains under section 54 of the Income Tax Act will be increased from investment in one residential house to two residential houses for a tax payer having capital gains up to 2 crore. This benefit can be availed once in a life time.
For making more homes available under affordable housing, the benefits under Section 80-IBA of the Income Tax Act is being extended for one more year, i.e. to the housing projects approved till 31st March, 2020.
