- Increase in Taxable Income
According to the interim budget, the tax exemption limit on annual personal income has now been increased to Rs. 5 lakhs. Thus, individuals with income less than Rs. 5 lakhs, can now avail a full tax exemption, even though there is no change in the income tax slab.
Overall, the increase in exemption limit is likely to benefit over three crore people in India.
Moreover, employees who had an annual income of up to Rs. 6.5 lakh were previously taxed according to their respective income tax slab. After the interim budget; however, these individuals may avail complete tax exemption on their income, considering they have invested in tax-saving schemes such as ULIPs. One of the key benefits of ULIP is that it allows investors to claim tax deductions up to Rs. 1.5 lakhs under Section 80C.
- Higher-Benefits on Capital Gains
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.
- Hike in TDS limit
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.
- Limit Extended on Gratuity Benefits
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.
- Improved EPF Benefits
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.
- Increase in Standard Deduction
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 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 according to the respective income tax slab. 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 such as ULIP plans. By doing so you will not only be able to enjoy various benefits of ULIPs but also increase your chances to get tax exemptions.