Budget 2019: What to expect on July 5

With finance minister Nirmala Sitharaman to announce her maiden budget on July 5, expectations among Indian citizens are already at peak. Here are Income tax changes you can expect from Budget 2019

Budget 2019: What to expect on July 5

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Finance minister Nirmala Sitharaman is set to announce her maiden budget on July 5, expectations among Indian citizens are already at peak. Most of the demands that have been proposed pertain to lower taxation, especially those belonging to the middle-income group in the run-up to July 5. According to India Today, they have demanded the government to either introduce tax breaks to reduce strain on their household expenses or increase the overall tax exemption threshold. Here are a few likely income tax changes by Nirmala Sitharaman that could be announced:

Income tax exemption limit

Since a full tax rebate under Section 87A in the interim budget up to Rs 5 lakh was introduced, it is unlikely that there will any other alteration in the exemption. People are hopeful that the government would make amends to increase the Income-tax exemption limit but it would lead to a reduction in the current tax base as more people will be exempted from paying income tax.

Also Read: Finance Minister Sitharaman to address RBI central board on July 8

Higher income tax deduction

Those exempting a hike in exemption limit may end up being disheartened but the government may cheer them up by introducing higher deductions under several sections of the Income Tax Act. The income tax deduction under Section 80(C), currently at Rs 1.5 lakh, could be increased to Rs 2 lakh or more. This will allow people to save more tax on investments under Section 80(C) of the Income Tax Act. Investments towards EPF, PPF, NSC, NPS and fixed deposits qualify for deduction under Section 80(C).

Also Read: Budget 2019: Government may increase income tax exemption to Rs 3 lakh

More tax benefits towards healthcare

The government may increase deduction in healthcare under tax saving instruments. Industry bodies have already urged the government to increase tax saving under Section 80(D) of the Income Tax Act. The limit could be raised from the current Rs 25,000 under Section 80(D) applicable to people aged below 60 years.

Higher deduction on home loans

Since the real-estate sector has been affected negatively due to a demand slowdown, the government could offer more tax benefits to buyers and provide a much-needed boost to the sector. According to the latest details, people can claim a maximum deduction up to Rs 2 lakh under Section 24B of the Income Tax Act. According to economists, there may be an increase in the limit to incentivise buying housing properties for pushing the demand in the sector.

Tax-free bonds may witness a comeback

One of the key goals in the budget by the government will be to boost infrastructure projects as it holds importance to boosting job growth and pushing up demand. In such a scenario, tax-free bonds may witness a comeback. This instrument will help to raise capital through government entities for infrastructure projects. These bonds are called 'tax-free' as the interest earned on them is not taxable.

Also Read: Most taxpayers don't expect direct tax changes in budget

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