New Delhi: In his election-eve budget, Finance Minister Piyush Goyal has proposed tax breaks for the middle class and sops for farmers and millions of employees in the unorganised sector. Income up to Rs 5 lakh per year will be exempted from tax; farmers owning up to 5 hectares of land will get income support of Rs 6,000 per year and unorganised sector employees will get Rs 3,000 per month pension.
“Small taxpayers especially the middle class, salary earners and senior citizens need certainty in their minds at the beginning of the year about taxes. Therefore proposal relating to such class of persons should not wait.”
Income Tax reliefs from FM’s speech:
The salaried taxpayer remains a key voting bloc for Modi as he plans to get re-elected in the face of a strengthening opposition. The number of such taxpayers stood at 2.3 crore in 2016-17, according to data released by the Central Board of Direct Taxes.
While the tax slabs remain the same, the rebate on income tax has been raised from Rs 2,500 to Rs 12,500. So, an individual with a taxable income of more than Rs 5 lakh in a year will continue to pay 5 % on the taxable income between Rs 2.5 lakh and Rs 5 lakh.
The finance minister also raised the standard deduction for salaried individuals to Rs 50,000 from Rs 40,000. In the previous budget, this standard deduction was introduced instead of tax-free transport and medical allowance worth Rs 34,200.
Tax exemptions on investments:
- Individuals with gross income up to 6.5 lakh rupees will not need to pay any tax if they make investments in provident funds and prescribed equities
- TDS threshold for home rent increased from Rs 1.8 lakh to 2.4 lakh
- Interest income up to Rs 40,000 in post offices and banks made tax free
- Capital gains tax exemptions under Section 54 to be available up to Rs 2 crore. Capital gains exemption to be available on 2 house properties.
- Income tax relief on notional rent from unsold houses extended to 2 years from 1 year
Other tax related reliefs:
- Income Tax returns to be processed within 24 hours and refunds will be paid immediately
- Within nearly two years, almost all assessment and verification of IT returns will be done electronically by an anonymised tax system without any intervention by officials