Following her predecessor Piyush Goyal's announcement in the interim budget presented in February, Finance Minister Nirmala Sitharaman on Friday said that income tax payers do not have to pay tax if they earn less than Rs 5 lakh per annum. "Only when annual taxable income exceeds 5 lakh, are they required to pay any tax," Sitharaman said during her maiden budget speech.
This means that small traders and pension earners must pay tax only if annual income exceeds Rs 5 lakh.
However, Sitharaman proposed a couple of income tax deductions for income tax payers. To make electric vehicles affordable, the government has decided an additional income tax deduction on Rs 1.5 lakh on interest paid on loans taken to purchase electric vehicles.
Similar deductions have also been proposed to promote affordable housing. Sitharaman said the government is proposing additional tax deduction of Rs 1.50 lakh on interest paid on home loans taken up to March 2020. The finance minister also proposed investment-linked tax benefit on manufacturing of products like lithium batteries and solar chargers.
The finance minister said that the direct tax revenue has increased from 78 per cent in the last 2 years.
In terms of income tax, bidget 2019 had little surprises. The Union budget 2018, too, had no changes in income tax slabs for individuals. However, it accounted for a standard deduction of Rs 40,000 for the salaried for transport and health. Senior citizens, on the other hand, benefited from deduction for health insurance which was raised to Rs 50,000.