Nirmala Sitharaman will present her maiden budget on July 5. This would be Modi government's first budget after the historic mandate in Lok Sabha elections 2019. Since, people have wholeheartedly chosen Modi as their leader, they now expect the Modi government to introduce some good reforms in the upcoming budget, to benefit the individual taxpayers.
Here are some income tax changes to expect in the upcoming Budget 2019-20 by Modi 2.0 government.
1. Higher tax exemption limit
The Modi 1.0 government in its interim Budget of 2019 had introduced a full tax rebate up to Rs 5 lakh Section 87A. Arun Jaitley, in his first Union Budget, had raised the personal income tax exemption limit from Rs 2 lakh to Rs 2.5 lakh. An increase of Rs 50,000 will increase the tax exemption limit to Rs 3 lakh. However, the move is unlikely since the benefit of the rebate was introduced in the Interim Budget.
2. Higher Income Tax deduction
A raise from Rs 1.5 Lakh to Rs 2 lakh or above is expected as Income Tax deduction under Section 80(C). This will allow people to save more tax on investments towards PPF, EPF, NSC, fixed deposits and NPS which are allowed for deduction under Section 80(C).
3. The comeback of Tax-free bonds
The tax-free bonds could make a comeback in the 2019-20 Union Budget to facilitate infrastructure projects by government entities. The reason they are called tax-free is because the interest earned is non-taxable. They have a long period of maturity - ranging from 10 years or more and are regarded as much safer option than others available in the market.
4. Higher home loan deductions
To boost the real estate sector which is facing a slowdown, the government could increase the deductions under Section 24B of the Income Tax Act. Currently, a maximum deduction up to Rs 2 lakh can be claimed. The move could be made to boost demand in the sector by incentivizing the buying of housing properties.
5. Health care tax benefits
To ensure affordability and accessibility of medical treatment to all class of patients, the government could increase the threshold of Rs 25,000 applicable as a deduction under Section 80(D) of Income Tax Act to people below the age of 60. Same could be raised for above the age of 60 who currently enjoys exemption of Rs 50,000 as a deduction.
6. Higher Long Term Capital Gains limit
The government could increase the threshold limit of Rs 1 lakh as a deduction on the sale of listed equity shares and units of equity-oriented mutual funds.