Changes in Income tax effective from April 1, 2019

1. Section 87A rebate

The amount of tax rebate under Section 87A has been increased from Rs. 2,500 to Rs. 12,500. Further, it shall be available to a resident individual whose total income does not exceed Rs.

5,00,000.

2. Standard deduction from salary

The limit of standard deduction for the salaried class taxpayers has been increased from Rs. 40,000 to Rs. 50,000.

3. No deemed rental income on having two residential house properties

If an individual owns more than one self-occupied house property then only one house property as per his choice is treated as self-occupied and its annual value is computed as nil. The other house property is deemed to be let-out as per section 23 and a notional rent is computed and charged to tax under the head 'Income from House Property'.

Section 23 has been amended with effect from 1/4/2019 to provide relief to the taxpayers by allowing them an option to claim nil annual value in respect of any two houses declared as self-occupied.

Though from F.Y. 2019-20, an assessee can claim annual value as nil in respect of two-self occupied house properties. However, there is no change in aggregate limit for deduction in respect of interest on housing loan. The aggregate deduction for interest on housing loan for both houses cannot exceed Rs. 30000 or Rs. 2,00,000.

4. Section 54 relief extended to 2 residential houses

Any long-term capital gains, arising to an Individual or HUF, from the sale of residential house property is exempted to the extent such capital gains are invested in another residential house property. The taxpayer is allowed to invest only in one residential house in India to claim section 54 relief.

From financial Year 2019-20, an assessee shall be able to claim exemption under section 54 even if he invests in two residential houses in India. However, this benefit shall be available where the amount of the capital gain does not exceed two crore rupees. Further, if the assessee exercises this option, he shall not be subsequently entitled to exercise the option for the same or any other assessment year, i.e., the assessee can exercise this option only once in a lifetime.

5. TDS on interest income

Section 194A deals with deduction of TDS on interest income other than interest on securities like interest on Fixed Deposits.

Section 194A has been amended to ease the burden of compliance by way of increasing the threshold limit from Rs. 10,000 to Rs. 40,000 for deduction of tax at source on interest income, other than interest on securities, paid by a banking company, co-operative society or a post office

6. TDS on rental income

The threshold limit for deduction of tax at source under section 194-I on rental income has been increased from Rs. 1,80,000 to Rs. 2,40,000.

7. Amendment to DTAA with Singapore and Mauritius

Protocols with Mauritius and Singapore were signed in year 2016 to tax capital gains. The protocol gave India the right to tax capital gains on transfer of shares of an Indian Company acquired on or after 1 April, 2017. Up to March 31, 2019 tax rates on capital gains is charged at 50% of the prevailing domestic rates. With effect from April 1, 2019 capital gains shall be charged at full domestic tax rates.