Announcing the Interim Budget, acting finance minister Piyush Goyal on Friday proposed that individuals earning up to Rs 5 lakh would get a full tax rebate u/s 87A. This will provide tax saving of up to Rs 12,500 for all taxpayers in this bracket. Those who save more can effectively push this rebate up to an income of Rs 6.5 lakh.

There is no changes in the Income tax slab rate. Only Rebate allowed U/s.87A has changed to benefit the middle income group.

Since this is a rebate and not a slab change, it will not impact the tax incidence of those with larger incomes group. However, it will have some impact for those, whose salaries are under Rs 10 lakh as they can add home loans and tuition fees to get additional benefits.

Following are the proposed amendment in income tax act.

  • Salary Standard deduction raised to Rs.50, 000 from Rs.40, 000 now to meet the day to day travelling expenses and other expenses.
  • Proposing to exempt levy of IT on notional rent on second occupied houses for middle-class families who stay at two places on account of their jobs. Hence you are not required pay Tax for your second home which you not occupying on account of Jobs.
  • TDS threshold on bank deposits raised from Rs 10,000/- to Rs 40,000/- U/s 80TTA. So no TDS will be deducted from your Fixed Deposit / Bank Deposit Interest, if your interest income does not cross Rs.40000/-. This will be beneficial to senior citizen who are retired from job and deposited his fund in the bank in form of FD.

If your total income after Chapter VIA deduction does not exceed Rs.500,000/- you will not require to pay any tax.

Individual taxpayers having taxable annual income up to Rs 5 lakh will get a full tax rebate and therefore will not be required to pay any income tax. As a result, even persons having gross income up to Rs 6.50 lakh may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc.

Further, if you have home loan then interest on home loan up to Rs.2 lakh will be the additional benefit to claim the deduction.

1- Individual (resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year:

Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

2 Resident senior citizen, i.e., every individual, being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:

Taxable income Tax Rate
Up to Rs. 3,00,000 Nil
Rs. 3,00,000 – Rs. 5,00,000 5%
Rs. 5,00,000 – Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

3 – Resident super senior citizen, i.e., every individual, being a resident in India, who is of the age of 80 years or more at any time during the previous year:

Taxable income Tax Rate
Up to Rs. 5,00,000 Nil
Rs. 5,00,000 – Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Plus:

Surcharge: 10% of tax where total income exceeds Rs. 50 lakh

15% of tax where total income exceeds Rs. 1 crore

Education cess: 4% of tax plus surcharge

Note: A resident individual is entitled for rebate u/s 87A if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less.

2. Income Tax Rates for HUF/AOP/BOI/Any other Artificial Juridical Person:

Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Plus:

Surcharge: 10% of tax where total income exceeds Rs. 50 lakh

15% of tax where total income exceeds Rs. 1 crore

Education cess: 4% of tax plus surcharge

3. Tax Rate For Partnership Firm:

A partnership firm (including LLP) is taxable at 30%.

Plus:

Surcharge: 12% of tax where total income exceeds Rs. 1 crore

Education cess: 4% of tax plus surcharge

Domestic Companies:

Domestic Companies are to be taxed at the rate of 30%. However, tax rate will be 25% if turnover or gross receipt of the company does not exceed Rs. 250 crores.

 Plus:

Surcharge: 7% of tax where total income exceeds Rs. 1 Crore

12% of tax where total income exceeds Rs. 10 Crore

Health & Education cess: 4% of tax plus surcharge

Conclusion: Over all the budget 2019 is good for the middle class income group.

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