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Union Budget 2019-20: Middle Class To Benefit From Lower Income Tax Burden

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Similar to the previous Budgets of the present Modi led government, the attempt will be made at introducing bold reforms to do away with tax evasion whilst at the same time boosting the tax base of the country.

At the same time, the finance ministry will continue to provide relief to middle class as in the previous instance by increasing tax exemption limit, reducing rate of taxation i.e. 5% for those earning up to Rs. 5 lakh on an annual basis and the increase in rebate limit of Rs. 12,500 that was made in the Interim Budget 2019.

Union Budget 2019-20: Middle Class To Benefit From Lower Income Tax Burden
 

In continuation with these budgetary benefits, the government may further extend tax relief to middle class taxpayers with an aim to increase disposable income in the hands of the individual and thus bolster spending pattern and hence revive the ailing economy which is witnessing slow growth across sectors.

So, some of the changes that are expected to be made by the Modi 2.0 government include:

1. Increase in exemption limit: Because of the Section 89 A rebate of Rs. 12,500, those earning up to Rs. 5,00,000 come within the tax net. And so in the Union Budget 2019, the exemption limit is expected to be increased from Rs. 2.5 lakh to Rs. 5 lakh.

2. Section 80 C relief part of Chapter VI A may be extended further: In the Budget 2014, the Centre extended relief with a higher amount of Rs. 1.5 lakh for various investments and expenses. And in the upcoming budget, it may be further extended to Rs. 2 lakh, to reduce the gross taxable income of the concerned.

3. Capital gains limit to be exempt from long term gains tax on equity to be increased: In respect of equities, ltcg on sale of shares held for over a year and exceeding Rs. 1 lakh came into effect from FY 2018-19, with the clause of grandfathering. Nonetheless, to promote the participation in equities, the exemption limit is expected to be increased beyond Rs. 1 lakh.

 

4. NPS taxation streamlining: It is widely expected that after the government approved changes to NPS in December last year, the taxation on the withdrawals on NPS will be rationalized and be made in line with other retirement products such as EPF or PPF.

GoodReturns.in

Read more about: union budget 2019 20 income tax
Story first published: Tuesday, June 25, 2019, 12:49 [IST]
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