The union budget is an important day for the salaried classes, as they keep an eye on the tax reforms and sops about their income. A detailed plan and tax rates are unveiled by the government that they need to follow. If you come under the category of a salaried employee, you need to know the highlights of the latest budget and the updates that affect you. The Union Budget 2019 announced some tax benefits for the middle and salaried classes. Those who earn income up to 5 lakhs are considered as the salaried class and now they needn’t have to pay tax. They are also exempted from deductions of interest on housing loans, education loan, and others. Let’s see the top highlights of the Budget 2019 that are important for the salaried class.
1. Income tax
The present income tax exemption limit for individual taxpayers is 2.5 lakhs. People earning income up to 3 lakhs are free from paying income tax. According to the new announcement in the budget 2019, there is no tax for the individuals with income up to 5 lakhs. The total income level is now increased to 5 lakhs from the previous income level of up to 3 lakhs. So to avail this tax benefit, your total income must not exceed 5 lakhs. There is also a full tax rebate for individuals having taxable income of up to 5 lakhs per annum. This means you are exempt from paying income tax if your gross income is up to 6.5 lakhs per year including investments.
2. Standard Deduction
The standard deduction minimizes the taxable income of the taxpayers and reduces the tax liability. Earlier the limit of standard deduction was set to Rs 40,000 and it was introduced instead of medical reimbursements and transport allowance. It takes off other allowances up to Rs 34,200 per annum and allows taxpayers to save a small amount. In the budget 2019, it is announced that the limit of the standard deduction has been raised to Rs 50,000 from the previous limit of Rs 40,000. This gives additional tax benefits to the salaried classes and pensioners. It allows taxpayers to make more tax savings.
3. Employee Provident Fund Organization
The Employees’ Provident Fund Organization helps the government in managing a Contributory Provident Fund Scheme that is compulsory for workers. Budget 2019 announces that through this organization the workers suffering from critical injuries will receive Rs 6 lakhs. That is the amount paid by the EPFO has been increased from Rs 2.5 lakhs to Rs 6 lakhs.
4. Gratuity Payment
Employees who have worked for at least 5 years continuously in an organization that has 10 or more workers are eligible to receive the payment of gratuity. The budget announced that the gratuity payment limit has been raised to Rs 30 lakhs from Rs 10 lakhs.
5. TDS Limit On Interest Income
Individuals who have bank deposits and post offices, savings deposits are allowed a 10% tax deduction, if the interest earned by them exceeds Rs 10,000 in a year. The Budget 2019 gave relief for depositors by increasing the TDS limit on interest earned from deposits of Rs 40,000.