In this video, we will discuss some of the most important implications of the proposals presented in Union Budget 2019
While there have been no fresh tax cuts or tax deductions, the good news is that there have been new taxes
There have been no tinkering of tax rates or tax slabs
Except for those in the higher income tax slabs. For those earning between Rs 2-5 crore, there is an increase of 3% in the surcharge
The increase in surcharge is 7% for those with income above Rs 5 crore
There is also a Budget proposal to allow you to file income tax with the help of PAN or Aadhar
As we know Permanent Account Number or PAN is required to file income tax. A lot of people don't have PAN. The proposal allows them to file their income tax return
What's more, you can use PAN and Aadhar inter-changeably for any financial transaction
An important area of Union Budget 2019 has been income tax filing and assessment
Government is all set to take the revolutionary step of ushering in faceless assessment
So, if you your income tax and just in case there is discrepency or query by the tax authorities, in the past you had to eventually ended up interacting with a predictable tax administration person
Union Budget 2019 does away with that possibility
The reason for this that many times there would be undesirable and unethical practices by tax administration officials
Now on, the queries will need to handled online and the physical interaction with a tax administration official will happen through a centralised tax administration individual
There is also the announcement of CPSE ETF having tax deductions much like equity linked savings schemes (ELSS)
CPSE ETFs have been part of government's disinvestment process and they have been offered to retail investors
Budget 2019 proposes to provide tax deduction for CPSE ETF much like ELSS
CPSE ETF, even with tax deductions can be your first tax saving investments since they are higher risk, equity investments, with risk arising from ETFs investing in select PSEs
You are better off investing in traditionally popular investments like PPF, NSC, ELSS and ULIP initially
When you are done with these options and have some extra scope left for tax saving investments, you could consider CPSE ETFs
Of course, CPSE ETFs can be part of investments portfolio for major financial goals such as child's higher education and your retirement
Union Budget 2019 outs into action a recent announcement related to NPS
It had been announced that the NPS maturity amount that you get at age 60, constituting of 60% accumulated savings will be tax-free
The proposal makes the retirement savings through NPS more attractive.
Remember, 40% of the NPS maturity savings needs to be compulsorily converted into regular retirement income through annuities. This income remains taxable
This aspect needs to be fixed in the future
Currently, the aspect tax-free lump sums makes NPS comparable with some life insurance plans where maturity amounts are tax free under Section 10(10D
Remember, NPS provides an extra Rs 50,000 of tax savings under Section 80CCD, over and above the tax savings of Rs 1.5 lakh under Section 80C
Another important Union Budget 2019 proposal pertains to legislative reforms to laws related rental properties
Indians typically have been buying properties more for their capital gain and less for rental income potential
The legislative reform will try and safeguard the interests of home owners so that people can get a good rental income, among other things
This will also help maintain their properties and help people needing regular income, like the retired, to benefit from another source of regular income