Let’s take a quick look at the key changes in the Interim Budget 2019 from a personal tax perspective, which will be effective from 1 April 2019.

1. Standard Deduction from Salary:

Standard deduction has been increased from Rs 40,000 to Rs 50,000 for salaried individuals (which was introduced in the Budget 2018 in lieu of exemption for medical reimbursement and conveyance allowance).

2. No deemed rental income on having two residential house properties:

Home-owners will not be required to pay tax on notional rent if they have more than one self-occupied property. According to the budget proposals, exemption has been proposed on the income tax from the notional rent on second -self-occupied house. However, there is no change in aggregate limit for deduction in respect of interest on housing loan. The aggregate deduction for interest on housing loan for both houses cannot exceed Rs. 30000 or Rs. 2,00,000.

3. Rebate under section 87A:

Individual taxpayers with annual income up to Rs. 5 lakh rupees will get full tax rebate. The income limit eligible to avail tax rebate under section 87A have been raised to Rs. 5 lakh from Rs. 3.5 lakh. The limit of tax rebate under section 87A increased to Rs. 12,500.00 from Rs. 2,500.00

4. Section 54 Relied extended to 2 Residential Houses:

Individual or HUF will able to claim Long Term Capital Gains (Capital gain on Sale of Residential House) exemption benefit where sales Proceeds are invested in purchase of Two Residential House but subject to following Conditions

  • the long-term capital gains from sale of such house property shall not exceed Rs 2 crore, and
  • the benefit can be claimed only once in the taxpayer’s lifetime.

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September 2021