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These announcements in budget 2019 likely to provide relief in income tax

With increasing income levels and inflation, taxpayers expect the budget 2019 may help them save their taxes.

By Newsd
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Taxpayers (dependents and entrepreneurs) expect more from the budget 2019 that will help them save their taxes. With increasing income levels and inflation, income taxpayers expect the new budget may help them save their income tax by increasing the investment limits, expand interest relief on the home loan and more.

Some expectations are as follows:

Increase in HRA limit in tier II cities like Bangalore, Pune, and Hyderabad

Mumbai, Delhi, Kolkata and Chennai are considered as the metropolis only by Indian taxpayers and 50 per cent of the salary under House Rent Allowance (HRA) can be claimed in these cities. It is expected that the new budget will add cities like Pune, Bangalore, Hyderabad and Gurugram to the list of metros so that residents of these cities can claim similar benefits.

Increase in the limit of exemption under Section 80C 

Last time, the investment limit under Section 80-C was revised in the Union Budget 2014-15 and from Rs 1 lakh to Rs 1.5 lakh was raised. With increasing income levels and inflation, this amount is no longer sufficient for saving on taxes. We hope that the new budget will increase the limit of exemption under section 80C to 2 lakh rupees.

Reduction in the tax rate for partnership firms / LLPs

Finance Minister Arun Jaitley had assured during the budget presentation in 2015 that he would reduce the rate of corporate tax in the coming years from 30% to 25%. In 2018, he cut rates for registered companies specified in turnover, but not to partnership firms and LLPs. This year, LLP and partnership companies are expected to get similar profits.

Explanation on LTCG on Listed Securities

If the profit on equity is more than Rs 1 lakh, then in the budget-2014 it has been levied with 10% Long-term capital gains (LTCG) tax. Simultaneously, switching from Growth option to dividend option or vice versa is subject to long-term capital gains or LTCG tax. However, in the case of Unit-linked insurance plan (ULIP) and National Pension System (NPS), the tax is not available within the same scheme i.e. from the date to the equity or the allotment of assets between them. It is expected that there will be some clarity on this and switch made within any scheme will not be liable for LTCG tax.

Expand interest relief on home loan

Individual taxpayers are expecting an additional benefit of Rs 50,000. Home loan is one of the biggest loans that a person can take advantage of in his life. The discount on interest component of up to Rs 2 lakh is not enough. Home buyers are expecting a rebate on the interest payment up to at least Rs 2.5 lakh.

New NPS rules will be effective after 2019

The government last month issued new NPS rules, which will be applicable after the central budget is presented on February 1. In the NPS contribution of the Central Government employees, the share of government is being increased by 4% (from 10% to 14%). In addition, NPS clearance will be made up to 60% tax-free. The rest must be invested in annuities. It is expected that these provisions will apply to all taxpayers, not just for the Central Government employees.