Full Budget 2019-20 Key Highlights and Changes

Finally, the Full Budget 2019-20 is presented by the Finance Minister. Let us see the highlights of the same. What are the Full Budget 2019-20 Key Highlights and Changes?

Major changes were already done during the interim budget. Hence, there are no big changes to it. However, certain changes are extraordinary.

Full Budget 2019-20 Key Highlights and Changes

# Income Tax Slab Rates for FY 2019-20

Your tax liability if your income is up to Rs.5 lakh will turn to be ZERO. However, there is no tax slab changes from the Budget 2019.

You notice that there is no change in Income Tax Slab Rates for FY 2019-20. Then how can be it is judged that there is no tax on an individual whose income is up to Rs.5,00,00?

The reason is the change in Sec.87A in Budget 2019. Earlier the limit under Sec.87A was up to Rs.3,50,000 and the deduction permissible was Rs.2,500. Now it is increased to Rs.5,00,000 and the deduction available is Rs.12,500. Refer my latest post in this regard (Revised Tax Rebate under Sec.87A after Budget 2019 ) and also (Latest Income Tax Slab Rates FY 2019-20 (AY 2020-21) ).

How to calculate Income Tax on your net or total income?

Now we understood the Latest Income Tax Slab Rates FY 2019-20 (AY 2020-21) . However, how to calculate the tax on our total income and how much is the tax benefits from Budget 2019 changes?

Let us take few examples and calculate the income tax amount.

# If you are under 30% Tax Slab and below 60 years of age

Let us say your next taxable income (after all deductions like Sec.80C and all) Rs.15,00,000.

Up to Rs.2,50,000-NIL

Rs.2,50,001 to Rs.5,00,000-Rs.12,500  @5%.

Rs.5,00,001 to Rs.10,00,000-Rs.1,00,000 @20%

Rs.10,00,001 and above (in this case Rs.15,00,000)=Rs.1,50,000 @30%.

So total tax will be Rs.12,500+Rs.1,00,000+Rs.1,50,000=Rs.2,62,500.

# If you are under 20% Tax Slab and below 60 years of age

Let us say your next taxable income (after all deductions like Sec.80C and all) Rs.7,00,000.

Up to Rs.2,50,000-NIL

Rs.2,50,001 to Rs.5,00,000-Rs.12,500 @5%.

Rs.5,00,001 to Rs.7,00,000=Rs.40,000 @20%

Therefore, the total tax will be Rs.12,500+Rs.40,000=Rs.52,500.

# If you are under 10% Tax Slab and below 60 years of age

Let us say your income is Rs.4,00,000

Up to Rs.2,50,000-NIL

Rs.2,50,001 to Rs.4,00,000-Rs.7,500 @5%.

However, using Sec.87A of IT Act, your tax liability will be ZERO.

An individual who is resident Indian and whose total income does not exceed Rs. 5,00,000 is entitled to claim rebate under section 87A up to Rs.12,500.

You noticed that there is no change in tax slabs. However, how can be it is zero tax for those who fall under up to Rs.5 lakh income? It is as below.

However considering the revised amendment to Sec.87A, your tax liability up to Rs.5,00,000 turn to be zero.

# Increase in Surcharge for an individual whose income is more than Rs.2 Cr.

A surcharge will be levied of 3% on individuals with a taxable income of Rs 2 to 5 crore, and 7% if the taxable income is Rs 5 cr and above.

# Tax Incentive for affordable housing

I have written a separate post on this. Refer the same at “Budget 2019-20 – Tax Incentive for affordable housing“.

# Rs.1.5 lakh Income Tax Deduction on Loan is taken to purchase an electrical vehicle

In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of purchase of an electric vehicle.

# CPSE ETF which are like Tax Saving Mutual Funds

ETFs have proved to be an important investment opportunity for retail investors and has turned out to be a good instrument for Government of India’s divestment program. To expand this further,
Government will offer an investment option in ETFs on the lines of Equity Linked Savings Scheme (ELSS). This would also encourage long term investment in CPSEs.

# Prefilled ITR Forms

Pre-filled tax returns will be made available to taxpayers which will contain details of salary income, capital gains from securities, bank interests, and dividends etc. and tax deductions. Information regarding these incomes will be collected from the concerned sources such as Banks, Stock exchanges, mutual funds, EPFO, State Registration Departments etc. This will not only significantly reduce the time taken to file a tax return but will also ensure the accuracy of reporting of income and
taxes.

# Interchangeability of PAN and Aadhaar

It is proposed to make PAN and Aadhaar interchangeable and allow those who do not have PAN
to file Income Tax returns by simply quoting their Aadhaar number and also use it wherever they are required to quote PAN.

# Faceless e-assessment

The existing system of scrutiny assessments in the Income-tax Department involves a high level of personal interaction between the taxpayer and the Department, which leads to certain undesirable
practices on the part of tax officials. To eliminate such instances, and to give shape to the vision of the Hon’ble Prime Minister, a scheme of faceless assessment in electronic mode involving no human interface is being launched this year in a phased manner. To start with, such assessments shall be carried out in cases requiring verification of certain specified transactions or discrepancies.

# A Single point of contact between the Income Tax Department and Tax Payer

Cases selected for scrutiny shall be allocated to assessment units in a random manner and notices shall be issued electronically by a Central Cell, without disclosing the name, designation or location of the Assessing Officer. The Central Cell shall be the single point of contact between the taxpayer and the Department. This new scheme of assessment will represent a paradigm shift in the functioning of the Income Tax Department.

# Special Additional Excise duty and Road and Infrastructure Cess

Increase Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel.

# Increase in customs duty on Gold and precious metals

There is an increase in customs duty on gold and precious metals. The increase in customs duty on gold and other precious metals from 10% to 12.5%.

# 2% withdrawal on cash withdrawal

TDS of 2% will be levied on Cash Withdrawals of above Rs 1 cr in a year from a Bank Account.

Refer the interim budget related posts at :-

• Budget 2019 Highlights – 7 changes you must know
• Latest Income Tax Slab Rates FY 2019-20 (AY 2020-21)
• Revised Tax Rebate under Sec.87A after Budget 2019
• Mutual Fund Taxation FY 2019-20