Changes from 1st april 2019
As per the earlier provisions for claiming the capital gains exemption on sale of residential property, the tax benefit was only based on those proceeds from the sale which were invested in one house property. The government acknowledged the capital gains burden on many taxpayers who may sell a residential house property to purchase two smaller properties, because of family needs. Hence, the law has been amended to extend the long-term capital gains exemption benefit even where the sale proceeds of a house property are invested for the purchase of two residential houses. However, the said benefit would be available subject to the following conditions:
# the long-term capital gains from sale of such house property shall not exceed Rs 2 crore, and
# the benefit can be claimed only once in the taxpayer’s lifetime.
Increase in TDS limit on interest earned from banks
The threshold for deduction of tax at source on interest earned from banks and post office deposits has been increased from Rs 10,000 to Rs 40,000. While this is not a tax exemption for deposit holders, this change would benefit small deposit holders such as non-working spouses as it would do away with the hassle of claiming a refund in the tax return where an individual’s annual income is below the basic exemption limit. Further, it also obviates the need for such non-taxable individuals (earning bank interest up to this limit) to submit Form 15G in order to get the banks not to withhold TDS.
While these may seem to be small changes, the Modi government may have succeeded in “putting more money into the hands” of many small tax payers. One should also keep all the above changes in mind while computing the advance tax liability for the financial year 2019-20, the due date for which is 15 April 2019 for the first installment.
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