In its interim budget, government has announced a number of tax reforms as it gets ready for the upcoming polls.
As expected, government has presented a budget which aims at the great Indian middle-class, farmers and defense personnel. This budget has been presented just before the elections and is another masterstroke by the Modi government in its bid to win the elections.
TDS threshold for tax deduction on rent hiked
In order to give relief to small taxpayers TDS(tax deducted at source) threshold on rent has been proposed to be raised from Rs. 1,80,000 to Rs. 2,40,000.This proposal is going to be a major relief and may upscale the sale of housing in affordable segment.
Capital Gains benefit on 2 housing investments
Another proposal is the rollover of capital gains up to Rs. 2 crore towards buying (investing) two houses compared to only one under the present one unit only.
Under Section 54 of the Income Tax Act, the rollover benefit can be availed just once. It is expected that many people will now set in for a second house.
Relief for housing developers
This budget extends the duration of exemption on levy of tax — on notional rent related to unsold properties to two years from the date of project completion, compared to a single year under the current guidelines.
A win-win deal for middle-class
Raise in the taxable income limit for rebate from Rs. 3.50 lakhs to Rs. 5 lakhs implies that taxpayers with gross incomes of even more than Rs. 8.35 lakhs would be exempted from taxes.
Deductions for tax savings investments of Rs. 1.5 lakhs, an additional deduction of Rs.50, 000 can be made for NPS (National Pension System), Rs.75, 000 for medical premium, Rs.10, 000 for bank interest, and a standard deduction of Rs.50, 000 for salaried employees. In spite of the fact that no tax is payable by such taxpayers even if their income is more than Rs.2.5 lakhs, there is still a need to file a return of income.
Taxpayers with taxable income in excess of Rs.5 lakhs from the limit are not going to get any further benefit from this budget and would continue to pay taxes as they have been doing so far.
Rs.75, 000 crores have been allocated to farm income support programme. Farmers owning less than 2 will receive Rs.6000 per year.12 crores marginal farmers are expected to gain because of this move.
It is a cleverly crafted budget that helps a huge number of people. The effect of the budget will be shown in election results.