New Delhi: In a huge relief to small depositors, Finance Minister Piyush increased the limit for tax deducted at source (TDS) on interest income from Rs 10,000 to Rs 40,000 per annum. This will benefit taxpayers who keep a large amount of money in their bank fixed deposits and various post office deposit schemes.
It is worth noting that this does not make the interest income exempt from tax. People have to show this amount as ‘income from other sources’ in their income tax returns (ITR).
Earlier, the banks used to withhold tax at source if the individual earning crossed Rs 10,000 in interest has not submitted Form 15G or Form15H form. The TDS status of an individual taxpayer can be seen online by accessing Form 26AS.
Finance Minister Goyal also proposed to hike TDS limit on rent income to Rs 2.4 lakh from the current Rs 1.80 lakh. The government also proposes to exempt tax on notional rent for two years for unoccupied houses.
The Narendra Modi-led government also increased the threshold tax exemption limit to Rs 5 lakh and increased the standard deduction to Rs 50,000 from Rs 40,000. At present, the proposal will benefit 3 crore middle-class taxpayers, the finance minister said while unveiling the Budget proposals for 2019-20.
Worth mentioning here is that increasing the threshold exemption limit will add the burden on the exchequer by Rs 18,500 crore.