Key Changes That You Must Keep in Mind for Making a Better Financial Plan for 2019-20 It is important to note that if the taxable income exceeds INR 5 lakh, after claiming all the tax-saving deductions, then one has to pay income tax as per the existing rates

Although, it's already over a month in the new financial year it's never late to make adjustments to one's personal financial goals in consonance with the new rules, regulations, adjustments and rebates that have been made available to an average taxpayer through the Union Budget 2019.

Following are the key changes in 2019 that may have important ramifications to one's monthly budget, tax planning and saving plans.

No Tax Payable On Taxable Income Of Up To INR 5 Lakhs:

As per interim budget 2019, for the FY2019-20 individuals with a taxable income up to INR 5 lakh in a financial year can avail full tax rebate except in a few specific cases, and thereby such individuals will not be required to pay any tax on their taxable income up to INR 5 Lakhs. The tax-rebate available under Section 87A has been increased to INR 12, 500 from FY 2019-20 onwards, as a result after availing the rebate, the individual tax payable will be zero. However, one has to be mindful that the overall tax slab has not been changed and it is mandatory to file an income tax return (ITR) if the total taxable income exceeds the minimum exemption limit. Individuals with taxable income exceeding INR 5 lakh can make use of various deductions allowed under the various sections of the Income Tax Act such as section 80C, 80D and other allowances such as House Rent Allowance (HRA), Leave Travel Allowance (LTA) to bring down taxable income up to INR 5 Lakhs to avail benefit of the tax rebate. It is important to note that if the taxable income exceeds INR 5 lakh, after claiming all the tax-saving deductions, then one has to pay income tax as per the existing rates.

Increase in Standard Deduction for the Salaried Class to INR 50,000:

Interim budget 2019 provisions have mandated a hike in the standard deduction that was available to the individuals; as per the new notification standard deduction limit has been raised to INR 50,000 from the existing INR 40,000 for salaried individuals and pensioners. This deduction can be claimed at the time of filing your income tax return, one should, therefore, be mindful of these new limits from a tax planning perspective.

No Tax on Notional Rent from Second House Property:

In previous years, an individual who owned multiple houses'/properties could treat any one of them as "self-occupied' with zero annual value and be required to pay tax on the other owned houses property/s, irrespective of whether they were actually on rent or not. For vacant house or properties income is calculated on a notional rent basis, under the new provisions, the tax levied on notional rent income from the second self-occupied property has been brought to zero.

TDS threshold limit hiked to INR 40,000:

Prior to the financial year 2019, taxpayers with income below the taxable limit had to submit Form 15G in order to avoid TDS on the interest income from banks. Going forward from FY 2019 there would be no TDS deduction on the interest income from banks and post offices deposits up to a threshold of INR 40,000 in earlier years this threshold was INR 10,000. This step not only leads to more cash in the hands of individuals and pensioners but also cuts down the paperwork that needs to be filed. It has to be highlighted that this exemption does not reduce one's tax liability on interest income as the income earned from fixed deposits held with banks is still taxable as per one's income tax slab.

Long term Capital Gain (LTCG) benefit extended to two residential house properties:

In FY 2019 taxpayers have been allowed to reinvest the capital gains (profits) from the sale of existing property into two properties instead of one in order to avoid LTCG tax. However, one must remember that this benefit can be availed only if the capital gains do not exceed INR 2 crore and can be availed only once in a lifetime.

New GST Rates for Housing:

From April 1, 2019, for on-going under-construction projects, developers/builders will have an option either to charge the GST as per old rates, i.e., at 12 per cent with availing input tax credit or new rates at 5 per cent without availing input tax credit. In case of affordable housing, such rates would be 8 per cent with an input tax credit or 1 per cent without the input tax credit. Any new under-construction projects starting from April 1, 2019, would mandatorily be required to charge GST as per new rates. There has also been a redefinition of affordable housing. As per the new definition, affordable housing is a residential house/flat with a carpet area of up to 90 square meters in non-metropolitan cities/town and 60 square meters in metropolitan cities having a value up to INR 45 lakh. Therefore, before making a purchase decision on an ongoing housing project one should be mindful of the applicable GST rates under the new provisions.

In addition to the items already discussed, there are few other important changes that one has to be cognizant of. After March 31st 2018 individuals holding physical shares of listed companies would no longer be able to transfer these shares to other counterparties in the physical form, individuals can continue to hold physical shares but in case there is a need to transfer the shares they have to be mandatorily in dematerialized form. Individuals now have to mandatorily disclose LTCG on equity investments in their IT returns, the threshold limit for TDS deduction on rent has been increased to INR 240,000 from the existing INR 180,000, also the exemption limit for gratuity has been increased from INR 20,00,000 to INR 30,00,000.

Although most important aspects pertaining to personal finance decisions of individuals have been covered in this discussion, the list is not exhaustive, there are some other provisions that have been omitted in the interest of brevity. The financial year 2019 would be a very different year from the perspective of an individual taxpayer and the salaried middle class. The provisions that have been made available to individuals would lead to significant tax savings and would also lead to meaningful cash in the hands of individuals. It is therefore advisable that one should try to educate oneself and attempt to avail all those exemptions that have been introduced in FY 2019; one should also not shy away from seeking professional help if there is some confusion surrounding the interpretation of some of the provisions that have been introduced.