The National Democratic Alliance government presented an interim budget in February 2019, and now, post the election victory, the Narendra Modi 2.0 regime is gearing up to present the Union Budget 2019 on July 5 in which it is expected to take a number of big-ticket decisions related to policy and reforms.
It’s understandable that taxpayers will have major expectations from the newly-appointed Finance Minister Nirmala Sitharaman considering the thumping majority her Bharatiya Janata Party secured in the recently-concluded Lok Sabha polls. We take a look at 5 such important announcements that could be made in the Union Budget 2019 speech.
1. Push On Digital Transactions
A banking cash transaction tax of 0.1% on withdrawal of more than Rs 10,000 in a single day was introduced by the United Progressive Alliance government in 2009. However, it was scrapped later that year. If some media reports are to be believed, the current government may re-introduce a Cash Withdrawal Tax (CWT) albeit with different terms and conditions. It is expected that this time the CWT would be levied if the total cash withdrawn from the bank is more than Rs 10 lakh in a financial year. The motive behind CWT could be to promote digital transactions and curb the circulation of black money. The Reserve Bank of India’s recent waiver of charges on NEFT and RTGS may be seen as a way to accelerate digital transactions. The central bank has also recently formed a committee to review charges on ATM withdrawals. According to media reports, the government opines that most account holders don’t need to withdraw more than Rs 10 lakh in cash in a year to meet their regular requirements.
2. Subsidies on e-payment of tax liabilities and GST payment
The government is also expected to take big steps to promote e-payment transactions. In this initiative, the government may come up with tax reliefs for Income Tax and GST taxpayers. On the other hand, the government may also take steps to discourage the cash payment of taxes.
3. Changes expected in the Income Tax slab
Income tax reduction is generally the most popular demand of taxpayers from any government, something that is likely to remain the same this year too. As a result, the government had allowed some relief to taxpayers having income up to Rs 5 lakh by introducing a full tax rebate for them in its interim budget earlier this year.
Now, there are expectations that the tax rebate benefit would be extended to other taxpayers too by changing the slab rate. The government may increase the taxable limit to Rs 5 lakh, raise the 5% tax slab to Rs 5 lakh to the Rs 7.5 lakh bracket, 20% to Rs 7.5 lakh to Rs 12 lakh bracket and 30% to beyond Rs 12 lakh limit. This will be significant as the 30% slab has remained unchanged at Rs 10 lakh since the 2012 budget.
4. Increase in the 80C tax benefit limit
The tax deduction benefit u/s 80C of the I-T Act is one of the key investments and tax saving tool for many taxpayers, especially the salaried people. There are expectations that the government may increase the tax deduction limit u/s 80C to Rs 3 lakh. The increase in the 80C limit could be very handy for those with home loans as they could be able to avail higher tax benefits on interest payouts.
5. Tax benefits for first-time homebuyers
One of the biggest goals of the current government is to achieve its ‘Housing for all’ vision on time. So, taking the Pradhan Mantri Awas Yojna (PMAY) forward, there are expectations that the government may introduce new tax reliefs for first-time homebuyers. Earlier, the government had extended the last date for its Credit Linked Subsidy Scheme (CLSS) to 31 March 2020, and now it may be extended further.
Apart from the above-mentioned expectations from the Union Budget 2019, the government may also allow a tax benefit for investments in Real Estate Investment Trusts (REITs), may take steps to bring in petrol and diesel under the GST ambit, apart from announcing easy loan access to small businesses in continuation with its “59 minutes loan scheme”.