Income Tax rules for new financial year: Key points

The interim Budget introduced certain key changes in the tax rules for the financial year 2019-20. These changes came into effect from April 1, 2019.

Here's a look at some of the key changes:

No need to pay tax if your net taxable income does not exceed Rs 5 lakh. Tax rebate under section 87 has been hiked to Rs 12,500, thereby making income up to Rs 5 lakh tax free.

If net income exceeds threshold limit even by a rupee, the rebate will vanish. However, a person with an income above the basic exemption limit of Rs 2.5 lakh will still have to file income tax return (ITR).

Standard deduction has been raised from Rs 40,000 to Rs 50,000.

When standard deduction was reintroduced in 2018, the government had removed the tax exemption to transport and medical reimbursements, thereby reducing the benefit of the change.

Till last year, a person who owned a second house property and it was vacant -- was taxed for the notional rent from the property. However, this year onwards there is no tax on such notional income.

Tax Deducted at Source (TDS) will apply only when interest from Fixed Deposits (FDs) and Recurring Deposits (RDs) exceeds Rs 40,000 a year.

Till last year, bank deducted 10 per cent TDS if interest earned on FDs and RDs exceeded Rs 10,000 a year.

Taxpayers who sell their property will now have the option to invest the long-term capital gain (LTCG) in two houses instead of one to avoid paying tax on the amount.

The benefit of investing LTCG from sale of house property into two houses can be availed only if the capital gains do not exceed Rs 2 crore once in a lifetime.

For under-construction housing projects, builders can charge either the old GST rate, i.e., 12 per cent with input tax credit or new rate, i.e., 5 per cent without input tax credit.

For affordable housing, GST rates would be either 8 per cent or 1 per cent.