Finance Minister Nirmala Sitharaman in her maiden Budget speech on Friday proposed many changes in income tax provisions for this year but kept income tax slab rates unchanged.
In a key announcement, she announced that Aadhaar and PAN would be made interchangeable for tax-filing purpose. This means that if you don’t have a PAN, you can file returns using Aadhaar.
Here are the key changes in tax provisions:
*Additional income tax deduction of ₹1.5 lakh on home loans for affordable houses costing below ₹45 lakh. This benefit will be available for home loans taken till March 2020. Cumulatively, the interest paid on home loan deduction will go up to ₹3.5 lakh, from the current ₹lakh for self-occupied house property.
* The FM also announced ₹1.5 lakh income tax deduction on interest paid on loans for purchase of electric vehicles.
* The government also announced 2% TDS on cash withdrawal on amount exceeding ₹1 crore in a year.
* Annual cash withdrawals over Rs 1 crore to be taxed at 2 per cent.
* The government also increased income tax surcharge for HNIs (high net worth individuals) earnings more than ₹2 crore a year. Those earning between ₹2-5 crore will have shell out 3% more, with surcharge rate being increased from 15% to 25%. Those earning above ₹5 crore will have to shell out a surcharge of 37%, from current 15%, reports.
* Retail investors in CPSE(central public sector enterprises) ETFs could get ELSS-like income tax benefits, according to the Budget proposals. The government today set a ₹1.05 lakh crore divestment target this year. Currently, investments made in ELSS (equity linked savings scheme) mutual funds, which come with a lock-in period of three years, are eligible for tax deduction of up to ₹1.50 lakh under Section 80C of the Income Tax Act.
*Also the government has asked the GST Council to reduce tax rate on EVs from 12 per cent to 5 per cent. Customs duty on certain parts of EVs has been reduced.
*Addressing the angel tax issue faced by startups, she said startups and investors who file requisite declarations will not be subjected to any kind of scrutiny in respect of valuation of share premium.
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