Update 01.02.2019- Highlights of Interim Budget, 2019

Taxation

Tax Rates

Income from house property

• Deduction amount of Rs 2 lakhs remain same in case of interest on housing loan, however the same will be available for two self-occupied properties in aggregate. (Section 24)
• Benefit of notional rent to be nil is proposed to be extended to second self-occupied property, earlier this benefit was allowed to only one self-occupied property. (Section 23)
• Extension of two years from the date of receipt of completion certificate is proposed in place of one year for considering the annual letting value as nil for building or land appurtenant thereto held as stock in trade. (Section 23)

Capital Gains

• Individuals and HUFs having capital gains upto Rs 2 cr from transfer of a residential house may claim tax relief in respect of gains invested in the purchase or construction of upto 2 residential houses. (Section 54)

Income from Salaries

• An increase in standard deduction of Rs 50,000 from Rs 40,000 or salary whichever is less is allowed as deduction. (Section 16)

Deductions

• The affordable housing scheme has been extended for one more year i.e. the housing projects approved till 31^st March, 2020 may avail the benefit. Deduction of 100% of the profit and gains derived from such business shall be available to those housing projects approved on or after 1st June, 2016 to 31st March, 2020 subject to fulfilment of specified conditions.

Tax Deducted at source

• Threshold limit for deduction of TDS on interest income paid by banking company, co-operative banking society or post office cooperative is increased from Rs 10,000 to Rs 40,000. (Section 194A)
• Threshold limit for tax deduction at source on rent is increased from Rs 1,80,000 to Rs 2,40,000. (Section 194- I)

Rebate for individuals

• A full tax rebate to individual taxpayers having taxable annual income upto Rs 5 lakhs which was earlier restricted to Rs 3.5 lakhs. A deduction of 100% of income tax on the total income or Rs 12,500 whichever is less is allowed under this section. (Section 87A)

Customs Duty

• To rationalize customs duties and procedures government has abolished duties on 36 capital goods.

Tax Administration

• Returns, tax payments, assessment procedures etc are all being done electronically. The Government aims to process all returns in twenty-four hours and issue refunds immediately.
• All verifications and assessments of returns selected for scrutiny proposed to be done electronically through anonymised back office, manned by tax experts and officials, thereby aiming elimination of personal interface between taxpayers and tax officers.

MSMEs

• 59 minutes loan portal to enable easy access to credit for MSMEs.
  • The Finance Minister said that all GST-registered MSMEs will get 2% interest rebate on incremental loan of Rs. 1 crore.
• Mandatory 25% procurement from MSMEs by CPSEs
  • Out of the 25% procurement mandated from MSMEs, 3% shall be reserved for women entrepreneurs
• Mandatory registration of vendors on GeM

Agricultural Sector

• Facility of extension of Kisan Credit Card scheme (KCC) to Animal Husbandry and Fisheries farmers.
• Provide the benefit of 2% interest subvention to the farmers pursuing the activities of animal husbandry and fisheries, who availing loan through KCC, including an additional 3% interest subvention in case of timely repayment of loans.
• For farmers affected by natural calamity, and who are provided funds via the National Disaster Relief Fund (NDRF), an interest subvention of 2%, topped with 3% will be given for the entire loan restructuring period.
• Government is launching a historic programme namely “Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN)”. Under this programme, vulnerable landholding farmer families, having cultivable land upto 2 hectares, will be provided direct income support at the rate of Rs. 6,000 per year.

Labour Sector

• Employee contribution in pension scheme has been kept intact and the government contribution has been increased from INR 3,500 per month to INR 7,000 per month and the maximum ceiling of the pay has been increased from INR 10,000 per month to INR 21,000 per month.
• In the event of death of a labour during service, the amount to be paid by EPFO has been enhanced from INR 2,50,000 lakh to INR  6,00,000 lakh.
• The ceiling of payment of gratuity has been enhanced from INR 10,00,000 to INR 20,00,000.
• The ceiling of ESI’s eligibility cover has been increased from INR 15,000 pm to INR 21,000 pm.
• The Interim Budget has provisioned for a monthly pension of INR 3,000, with a contribution of INR only 100 per month, for workers in the unorganized sector to those 60 years of age and having monthly income upto INR 15,000.
• The interim budget provides for establishment of National Programme on ‘Artificial Intelligence’ in order to take the benefits of Artificial Intelligence and related technologies to the people.

Prevention of Money Laundering Laws

• Time period of attachment under section 8(3)(a) extends by a total of 275 days. The period of attachment by the Adjudicating Authority has changed to 365 days from the current period of 90 days.

To refer the amendments in stamp duty, refer our article here.

You can read our detailed analysis on the Interim Budget 2019 here.