The Budget 2019-20 has not made any change in the income tax slabs for the middle class, Finance Minister (FM) Nirmala Sitharaman noting that the interim budget had alleviated the tax burden on small and medium income-earners.
“Those having annual income up to Rs 5 lakh are not required to pay any income-tax. We are thankful to the taxpayers who play a major role in nation building by paying their taxes,” she said.
But she did make it simpler for people to file their tax returns, even those who do not have a permanent account number card, or PAN card. Such people can simply quote their Aadhaar number when they have to file their returns or elsewhere, the finance minister said.
Tax payers would also get pre-filled tax returns which will contain details of salary income, capital gains from securities, bank interests, and dividends etc. and tax deductions. “This will not only significantly reduce the time taken to file a tax return, but will also ensure accuracy of reporting of income and taxes,” she said.
She said faceless assessment of tax returns in electronic mode is being launched this year in a phased manner.
Sitharaman proposed to hike the tax for the super rich. She said people in the highest income brackets need to contribute more to the nation’s development in view of rising income levels.
“I, therefore, propose to enhance surcharge on individuals having taxable income from Rs 2 crore to Rs 5 crore and Rs 5 crore and above so that effective tax rates for these two categories will increase by around 3 % and 7 % (percentage points) respectively,” she told the Lok Sabha in her 129-minute speech.
Among other things of concern to the common man, the FM raised cess on petrol and diesel by Re 1 per litre, while customs duty on gold was also increased to 12.5 per cent from existing 10 per cent.
The minister also announced that people who take a loan to buy an electric vehicle will get additional income tax deduction of Rs 1.5 lakh on the interest repaid on the loans. The Government has already moved GST council to lower the GST rate on electric vehicles (EV) from 12% to 5%.
Sitharaman also raised the tax deduction on interest paid on housing loans from Rs 2 lakh for properties occupied by the tax payer to Rs 3.5 lakh – an increase of Rs 1.5 lakh. The increase in deduction, however, is conditioned on the tax payer taking the loan before March next year. Also, the house should not cost more than Rs 45 lakh.
“This will translate into a benefit of around Rs 7 lakh to the middle class home-buyers over their loan period of 15 years,” she said.
She also said there will be no merchant discount rate (MDR) charges on digital transaction made at big establishments having annual turnover of more than Rs 50 crore.
The finance minister also announced TDS (tax deducted at source) of 2 per cent on cash withdrawal of more than Rs 1 crore from a bank account.
She noted that tax collections of the government had grown 78 per cent over the last five years to Rs 11.37 lakh crore last year.
She said that the fiscal deficit in 2019 is 3.3%, brought down from 3.4%.
All companies having annual turnover of 400 crores, will now be under the bracket of 25% corporate tax rate . This will cover 99.3% of all the companies.