Threshold on taxing post office, bank deposit interest hiked to Rs 40,000

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New Delhi, Feb 1 (IANS) Casting its net for votes as widely possible for the coming general elections, the Modi government on Friday offered various tax sops for the middle class that would effectively take those earning up to Rs 9 lakh annually outside the tax net, including raising the threshold limit for taxing incomes earned by small savers.

Breaking convention on the last budget of a government in an election year with his tax proposals, acting Finance Minister Piyush Goyal proposed raising the tax deducted at source (TDS) threshold on interest earned on bank and post office deposits from Rs 10,000 to Rs 40,000 for the next fiscal.

“This will benefit small depositors and non-working spouses,” Goyal said presenting the Interim Budget 2019-20 in Parliament.

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Besides, he proposed raising the TDS threshold for tax deduction on rent from the current Rs 180,000 to Rs 240,000 “for providing relief to small taxpayers”.

Among his other tax proposals, the Finance Minister proposed extending the benefit of rebate under Section 87A of the Income Tax Act to those with income is up to Rs 5 lakh. This provision currently allows a rebate of Rs 2,500 for those with net taxable income up to Rs 3.5 lakh.

Goyal on Friday increased this rebate to Rs 12,500 — the equivalent of 5 per cent tax on Rs 2.5 lakh to Rs 5 lakh slab — and raised the eligibility criterion for claiming the rebate to Rs 5 lakh from Rs 3.5 lakh.

“Individual taxpayers having taxable annual income up to Rs 5 lakh will get full tax rebate and, therefore, will not be required to pay any income tax.

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“As a result, even persons having gross income up to Rs 6.5 lakh may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc.

“In fact, with additional deductions such as interest on home loan up to Rs 2 lakh, interest on education loans, National Pension Scheme contributions, medical insurance, medical expenditure on senior citizens etc., persons having even higher income will not have to pay any tax,” he added.

–IANS

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