Key Highlights of the changes in the interim budget affecting the individual taxpayer are as under:
Income under the head salaries
Section 16(ia): Limit of Standard deduction from income under the head salary is increased from Rs. 40,000/- p.a. to Rs. 50,000/-p.a. for all salaried person.
Income from house property
Section 23(4): Previously, If we own more than one house property, we have to pay tax on the rental income or notional rent income for second house property whether we had given it on rent or not. Now, the second house is also exempted from tax as we don’t require to calculate notional rent if we have not given second house property on rent.
Rebate from tax
Section 87A: rebate from income tax is increased from Rs. 2,500/- to Rs. 12,500/- for individual or HUF. This rebate is allowed to the individual who has net total income up to Rs. 5,00,000/-. If the net total income of any individual is more than Rs.5,00,000/- then the benefit of the rebate is not available.
Tax Deducted at Source (TDS)
Section 194A: Limit for TDS deduction is increased from Rs. 10,000/-p.a. to Rs. 40,000/-p.a. for interest income from bank deposits and post office savings. Limit for other interest is remained the same, i.e., Rs.5,000/-p.a.
Section 194I: Limit for TDS deduction is increased from Rs. 1,80,000/-p.a. to Rs. 2,40,000/-p.a. for Rent income from property or plant and machinery took on rent.
Section 54: If we invest capital gain on sale of house property to another house property it is exempted from tax under section 54. Now, the same benefit can be availed up to new house property maximum up to Rs. 2 Crores. However, this benefit can be claimed only once in a lifetime.
Incentives for farmers
Government has also provided incentive of Rs. 6000/- p.a. (under the scheme of Pradhan Mantri Kisan Samman Nidhi) to all the farmers having agriculture land less than 2 hectares of cultivable land. It will be applicable from September 2018. The amount will be transferred to farmer’s account in three installments. It will cover 12 crore small and marginal farmers of the country.
Pension Scheme for the unorganized sector
The government has introduced a mega pension scheme to provide a monthly pension of Rs. 3000/- for workers in the unorganized sector after the age of 60 years with a contribution of Rs. 100/- p.m.