April 2019 welcomed the beginning of the new financial year. Having met the income tax deadline, you must have heaved a sigh of relief. But, as we usher in the new F.Y. 19-20, it is time to renew financial planning to account for recent amendments and new rules. This article covers 9 such significant key changes in the personal finance landscape that you may bear in mind for this financial year.
- Zero tax on taxable income up to Rs. 5 lakhs
If you have a taxable income of Rs. 5 lakhs in a financial year, you can avail full rebate, without having to pay any tax on it. Under Section 87A, the tax-rebate limit has been hiked from F.Y. 2019-20 onwards to Rs. 12,500. If your income exceeds Rs. 5 lakh, you can make use of various deductions such as Section 80C. You can invest in tax saving schemes/tax saving mutual fund (ELSS Fund).
- Reporting Long Term Capital Gains (LTCG) from equity yields
If you have sold equity shares and equity-oriented mutual funds, long term capital gains above Rs. 1 lakh attracts a tax of 10% without indexation benefit. It is mandatory to report such LTCG gains on the sale of mutual funds in the ITR.
- Standard deduction limit increased to Rs. 50,000
The standard deduction from salary has been hiked from Rs. 40,000 to Rs. 50,000. This can result in higher purchasing power in the hands of salaried individuals.
- Investing capital gains in two houses
You can reinvest long-term capital gains arising from the sale of one house property in two houses instead of one and save long-term capital gains tax. However, this benefit can be availed only if the capital gains are not more than Rs. 2 crores and can be exercised only once in a lifetime.
- No income tax on notional income from the second house
Previously, an individual owning more than one house property could treat any one of them as self-occupied property and pay tax at a notional rent value. From F.Y. 2019-20, however, you do not have to pay any income tax on the notional rent of a second house that you own.
- New GST rules and rules for the housing sector
From April 1, 2019, builders and developers will get one-time option to charge GST as per new rates at 5% without an input tax credit or continue paying tax at the old rate of 12% with input tax credit for all on-going under-construction projects. Any under-construction project commencing after April 1, 2019, would mandatorily attract GST as per the new rates. You can invest in mutual funds to purchase your dream home and benefit from this amendment.
- TDS threshold limit increased to Rs. 40,000
If you earn interest income from bank FDs and post office deposits, there would be no TDS on income up to Rs. 40,000.
- No transfer of physical shares from April 1, 2019
Since April 1, 2019 onwards, SEBI has made it mandatory to transfer the shares of listed companies in demat form only.
- Interest rates on loans to be decided by an external benchmark
Till now, loans were linked to internal benchmarks, i.e. Prime Lending Rate (PLR), Marginal Costs Of Funds Based Lending Rate (MCLR) and Benchmark Prime Lending Rate (BPLR). RBI is working towards linking loan rates to an external benchmark for added transparency.
You can keep a tab on the points mentioned to increase your financial efficiencies in the long-run.
