2019 Interim Budget Feb 01,2019 - All Direct Tax Changes Explained

1)Rebate Under Section 87A:

• Assessee having net Taxable Income upto Rs. 5,00,000 will now get Tax Rebate of Rs. 12,500. This will effectively make their tax liability as zero.
• However it may also be noted that the assessee having income upto Rs. 5,00,000 may still have to pay taxes if his income includes any incomes which are subject to tax at special rate exceeding 5%.
• This rebate is not available to Assessees other than Resident Individuals.

2)Standard Deduction under Section 16 (ia) has been increased to Rs. 50,000 from existing Rs. 40,000 (Increase of Rs. 10,000)

This increase in Standard Deduction will provide additional tax relief of Rs 2,080 and Rs 3,120 for Salaried Assessee falling under Tax slab rate of 20% and 30% respectively

3)For Assessee having Income from House Property:

Previously if Assessee had more than two Residential Houses and all are occupied by him for his residential use or one is occupied by him for his residential use and others are vacant, then assessee has to declare only one house as self occupied and others as Deemed let out. On the houses which are declared as Deemed Let Out houses, Assessee had to offer income as Notional Rent and had to pay taxes on the same.

Now an amendment has been carried out in Section 23 which allows Assessee to have Two Self occupied Houses. It means that If Assessee had more than two Residential Houses and all are occupied by him for his residential use or one is occupied by him for his residential use and others are vacant, now Assessee can declare two of such houses as Self Occupied and need not to offer any Notional Rent on such Self occupied houses for taxation purpose.

(Taxability of notional rent in respect of second self occupied house for Assessees having exactly two residential Houses still require clarifications)

4)Section 24 amended to provide that the deduction limit of Rs 2 lakhs has now been extended to owning upto two houses
 

Deduction of House Loan Interest

It has been clarified that the Limit of Deduction of House Loan Interest for Self occupied property under Section 24(b) will continue to exist at Rs. 2,00,000 in aggregate for both the Self occupied houses. It means that if Assessee had taken Loan for both Houses which are declared as Self Occupied by him, then maximum deduction in respect of House Loan Interest for the both houses put together cannot exceed Rs. 2,00,000.

5)Section 54 provides for exemption from LTCG arising from transfer of Residential House to the extent of amount invested in new Residential House. Previously this benefit can be availed only if the Capital Gain is invested in one Residential house, now a once upon a lifetime option is given to assessee to invest long term capital gain upto Rupees Two Crores in two residential Houses in India.

6)Section 194A amended to provide for higher exemption limit from Rs 10000 to Rs 40000 in respect of Interest earned from Bank Deposits

7)Section 194 I amended to provide for higher exemption limit from Rs 180000 to  Rs 240000

8)Extension of Time Limit for obtaining approval of affordable Housing Projects:

PreviouslySection 801BA provides for tax benefit in respect of affordable housing projects undertook by developers if the approval for the same is obtained on or before 31.03.2019 subject to fulfillment of certain other conditions. Now this Tax benefit will be available to developers if the approval is obtained on or before 31.03.2020.