5 Income Tax Changes and Impacts – Budget 2019

It’s time for Interim Budget 2019-20.A Budget 2019 was announced by Finance Minister Piyush Goyal. The expectation from the budget was very high. Up to some extent these expectation were fulfilled. Major Income tax related changes were announced in budget 2019. Let’s take a look at 5 New Tax Changes and its impact post Budget 2019.

budget 2019

5 Income Tax Changes and Impacts – Budget 2019

Change in Income Tax liability and Rebate Benefits

The first change is no income tax to individual up to 5 Lakh income. No change has been proposed in the Income Tax slab rates. However, the Income Tax rebate under section 87A has been increased from the current Rs.2500 to Rs.12500.  It indirectly means that the government has extended benefit of Rs.12500 to individual earning income up to 5 Lakh. If your income is exceeding 5 Lakh the effective tax slab will be as it was.

The applicable Tax Slabs for FY 2019-20 (AY 2020 -21) is given below.

Effective Income Tax slab for individualsRate of Income Tax
Income up to 5 Lakh0% (NIL Tax)
Once Income exceed 5 Lakh
Income from 2.5 Lakh to 5 Lakh5%
Income from 5 Lakh to 10 Lakh20%
Income from 10 Lakh and above30%


 Income Tax Slabs & Rates FY 2019- 20, AY 2020-21
Income tax SlabsGeneral CategorySr.CitizenVery Sr. Citizen
Up to Rs. 2. 5 LakhNILNILNIL
Rs.2.5 Lakh to 3.0 Lakh5%NILNIL
Rs.3.0 Lakh to Rs.5.0 lakh5%5%NIL
Rs.5.0 Lakh to Rs.10.0 Lakh20%20%20%
Above 10.0 Lakh30%30%30%

So, if your gross income is up to 6.5 Lakh and you take benefit of section 80c, your tax liability will be zero.

Standard Deduction Benefit

A standard deduction for the salaried is amended. Earlier standard deduction of Rs.40000 was applicable. Now this limit is enhanced to Rs.50000. This means salaried people will get benefit of additional Rs.10000 of standard deduction. This limit is introduced in lieu of the exemption in respect of transport allowance and reimbursement of medical expenses.

TDS Limit on Bank Fixed Deposit and Post office schemes

For the interest earned on bank/post office deposits, it is proposed that upper limit for Tax Deduction at Source (TDS) will be raised from the current Rs 10,000 to Rs 40,000 in a financial year. It is an increase in TDS limit and not tax benefit. Tax will be calculated as per your actual income and you need to pay taxes accordingly.

Exemption of notional rent on Second Property

At present, income-tax on notional rent is payable if you have more than one Self-Occupied house Property (SOP). Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children’s education, care of parents etc.; it is proposed to exempt levy of income-tax on notional rent on a second self-occupied property. Effectively, this means there will be no income-tax on your second house property.

Avoidance of Long term Capital Gain tax on sell of property

As per new provision when you sell residential property you can avoid long term capital gain tax. It is proposed that this benefit of the roller of capital gains under Section 54 be increased from investment in one residential house to two residential houses for a taxpayer having capital gains up to Rs 2 crore. This benefit can be taken once in life time.

Budget 2019 Review –

Overall Budget 2019 is lollipop budget. Lok Sabha election will be taking place in 2019. In order to please common man, the government has tried to showcase “Acche Din”. The benefits in budget 2019 is announced mostly in the favour of salaried, common man, farmers and un organized sector workers.

What are your views on Budget 2019? Do share it in the comment section.

Article by Raviraj

Raviraj is the man behind moneyalpha.com. He is graduate in finance, engaged in blogging since 6 years. He is not affiliated with any financial product, service provider, agent or broker. The purpose of this blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

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