The government will be presenting their interim budget soon on 1st February 2019. This time the interim union budget may go beyond vote-on-account, as indicated by Mr. Arun Jaitley.
Our Budget Xpert envisages some important expectations from this Union Budget 2019:
1. Double the Income Tax exemption limit to Rs. 5 Lakhs :
2019 Interim Budget is likely to bring goods news in respect of an increase in basic income tax exemption limit from Rs. 2,50,000 to Rs. 5,00,000. The Confederation of Indian Industry (CII) has demanded the doubling of exemption limit as a pre-budget recommendation.
Currently, the income upto Rs.2,50,000 is exempted from tax and tax is levied at 5% for income between Rs. 2,50,000 to Rs. 5,00,000, 20% for income between Rs. 5,00,000 to Rs. 10,00,000 and 30% tax on income above Rs.10,00,000.
The CII also suggested reducing the corporate tax rate to 25% from 30%, irrespective of the turnover.
2. Limit of Section 80C may likely to increase:
The CII has also suggested increasing the limit of Section 80C from Rs.1,50,000 to Rs. 2,50,000 as tax saving investment.
The limit was last revised by the government in Budget 2014 of Rs.1,50,000.
Our Budget Xpert expects an increase in the Section 80C limit as a tax saving benefit to taxpayers in this Interim budget 2019.
3. Reimbursement of medical expenses and transport allowance along with the standard deduction of Rs. 40,000 :
The exemption for reimbursement of medical expenses and transport allowance may be reinstated along with the standard deduction of Rs.40,000.
4. New National Pension Scheme (NPS) come into effect after Budget 2019:
New NPS rules will be approved by the government and will be effective after the Budget 2019. It has decided to increase the share of NPS contribution from 10 % to 14 % for Central Government employees.
Additionally, NPS withdrawal will now be tax-free up to 60 %. Remaining 40% though must be mandatorily put into an annuity. This amendment is likely to be introduced through the Finance Act, 2019.
5. Set off of Long Term Capital Loss
CII also suggested Long-term capital loss should be allowed to be set off and adjusted from short-term capital gains.
6. Farm Loan Waiver
Farm loan waivers have proved to be an effective election tool and expectation of some relief to farmers by the central government are also high with general elections round the corner.