Tax break on interest paid towards home loan and loans procured for buying electric vehicles are big positives offered by Union Budget 2019 for the common man
Budget 2019 presented by Finance Minister Nirmala Sitharaman was historic and important in more than one way. Historic because it was only the second time that a woman presented the Union Budget, the first being former Prime Minister Indira Gandhi, and important as it was tabled at a time when the new Government is facing challenges on multiple fronts including a slowdown in domestic consumption, farmer distress and rising unemployment, among others.
The announcements made in the Interim Budget 2019, before the General Elections, had infused a lot of enthusiasm into this full-fledged Budget, particularly from the common man. In the Interim Budget, the then Finance Minister Piyush Goyal had announced zero income tax on taxable income up to Rs. 5 lakh or less along with several schemes for farmers and those in the unorganised sector such as Pradhan Mantri Kisan Samman Nidhi Yojana and Pradhan Mantri Shram Yogi Maandhan. So, how did Union Budget 2019 fare from the common man’s perspective? Let’s find out.
Tax relief on interest paid on home loans – A big positive
For a common man, owning a home is a dream. The Government has given a big push to affordable housing with initiatives such as the Pradhan Mantri Awas Yojana (PMAY), where subsidized home loans are available according to the income category of the borrower. Additionally, tax breaks of up to Rs. 2 lakhs are available on interest paid towards the home loan procured under PMAY.
Union Budget 2019 has provided a big boost to affordable housing and relief to the common man by proposing an extra tax deduction of Rs. 1.5 lakh for interest paid on home loans up to Rs. 45 lakhs. This deduction is applicable on home loans taken in the current financial year, up to 31st March 2020. As per estimates, the move will help an individual get a benefit of Rs. 7 lakhs over a loan period of 15 years.
The provision will particularly benefit first time home buyers in the middle-income category, in Tier II and Tier III cities. This category of buyers forms a significant chunk of the population. The additional tax break will serve twin purpose – it will bring down tax liability and help realise one of the fundamental life goals of owning a home.
Tax soap on purchase of electric vehicle: Another shot in the arm of the common man
In the last few years, electric vehicles have caught the fancy of the common man. Easy to maintain and lower running cost have made these vehicles extremely popular across different parts of the globe and slowly India is gearing up to adopt them. However, these vehicles are expensive and often needs an external source of funding in the form of loans.
However, the Budget has proposed tax soap of up to Rs. 1.5 lakh on interest paid towards the purchase of electric vehicles through loans. Finance Minister Nirmala Sitharaman said that the initiative would provide a benefit of up to Rs. 2.5 lakh for a customer during the entire loan tenure. Also, in a bid to make these vehicles more cost-effective, the Government has proposed to the GST Council to lower GST on them from 12% to 5%.
These announcements have come close to the suggestions of the NITI Aayog that has proposed migration to electric vehicles in the next few years. While the move is expected to benefit the common man, the announcement has also made lending institutions and insurers sit up and take note. There’s a general feeling that demand for vehicle loans will see a spike following this announcement by the Government along with a rise in the number of motor insurance policies.
Ease of tax compliance
To ease tax compliance, Budget 2019 has made some progressive decisions. Now, while filing taxes, you can also quote your Aadhaar number, if you don’t have PAN. Note that till date it was mandatory to quote PAN number while filing tax returns along with linking PAN with Aadhaar.
The move is expected to widen the tax base and aid the common man as the number of Aadhaar card is higher than PAN card. According to estimates, there are over 41 crore PAN cards, while the number of Aadhaar card is over 120 crores.
At the same time, now you will get pre-populated ITR forms where the data is collected from various financial institutions such as banks and mutual fund houses, among others. These forms will make tax filing easy and fast. However, at the same time, it is important to exercise caution and ensure that the data filled is accurate.
To sum up
The common man can take a lot of out of Union Budget 2019. The schemes announced in the Budget, particularly the tax rebates on home loan interest rate and electric vehicle, are expected to play a key role in shaping up of the Indian economy in the coming days.
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