5 key changes in annual income tax assessment in Budget 2019

Mumbai: The government proposed many changes in annual income tax assessment like additional income tax deduction of Rs 1.5 lakh on home loans for houses under Rs 45 lakh, were announced in Budget 2019.

Finance Minister Nirmala Sitharaman in her first budget outing on Friday did not change income tax slab rates. However, she announced a number of new income tax proposals that may benefit many tax payers.

Aadhaar and Permanent Account Number (PAN) would be made interchangeable as announced by Finance Minister Nirmala Sitharaman for purpose of income tax-filing. You can now file returns using Aadhaar card even if you don’t have a PAN.

• Additional income tax deduction of Rs 1.5 lakh on home loans for houses under Rs 45 lakh announced in Budget 2019. This benefit would be for home loans availed till March 2020. In total, the interest paid on home loan deduction will go up to Rs 3.5 lakh, from the present Rs 2 lakh for self-occupied housing property.
• For purchase of electric vehicles, the government announced Rs 1.5 lakh income tax deduction on interest paid on loans.
• For withdrawal of cash from banks on amount exceeding Rs 1 crore in a year, the government announced 2 per cent Tax Deducted at Source (TDS).
• As per to the Budget proposals, Retail investors in central public sector enterprises (CPSE) Exchange Traded Funds (ETF) could get Equity Linked Savings Scheme (ELSS) like income tax benefits. The government set a Rs 1.05 lakh crore dis investment target in Budget this year. Under Section 80C of the Income Tax Act, presently, investments made in ELSS mutual funds, which have a lock-in period of three years, are eligible for tax deduction of up to Rs 1.50 lakh.
• For high net worth individuals (HNI) earning more than Rs 2 crore per year, the government enhanced income tax surcharge. HNIs having income between Rs 2-5 crore will have pay more with income tax rate being increased from 15 per cent to 25 per cent. From current 15 per cent, individuals earning above Rs 5 crore would have to shell out 37 per cent income tax.

"The budget was an effort at laying down a clear roadmap for tax administration over the next five years with introduction of a slew of measures specifically aimed at simplifying the tax filing process, e-assessment process and interchangeability of PAN with Aadhaar. Additionally, the ideology of taxing the super-rich continues to be carried out with increase of surcharge on individuals earning more than Rs 2 crore. Also, in order to provide an impetus to affordable housing scheme, additional relief of Rs 1.5 Lakh per year has been provided to first time home owners," told Nitin Baijal, director at Deloitte Haskins and Sells LLP to Mint.

The government proposed that individuals who carry out certain high value cash transactions have to compulsorily file their tax returns even if their taxable income is less than Rs 2.5 lakh.

Such transactions include depositing an amount exceeding Rs 1 crore one or more current accounts; spending more than Rs 2 lakh for himself or any other person for travel to a foreign country; spending  an amount or total amounts of more than Rs 1 lakh towards electricity bill.