CA Raja Saha

Article explains Budget 2019 changes related to No tax on taxable income up to Rs 5 lakh,  Standard Deduction u/s 16(ia),  Income Tax Slab Rate for AY 2020-21 for Individuals, Tax Slab Rate for Domestic Company, Tax Rates for Foreign Company, Income Tax Slab for Co-operative Society,  Notional Rent on second self occupied house property exempt from tax u/s 23 and changes in TDS threshold limit, Exemption under section 54

i) No tax on taxable income up to Rs 5 lakh

Individual taxpayers having annual taxable income up to Rs 5 lakh will get full tax rebate, therefore, will not be required to pay any income tax. People with gross taxable annual income up to Rs 6.5 lakh will have to pay no tax if they utilise the maximum benefit of Rs 1.5 lakh available under section 80C.

ii) Standard Deduction u/s 16(ia)

Amount of Standard deduction u/s 16(ia) increase from Rs. 40,000/- to Rs. 50,000/- for the AY 2020-21.

iii) Income Tax Slab Rate for AY 2020-21 for Individuals:

Income tax slabs

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%

From the AY 2020-21 this rebate is available only if the total annual taxable income is upto Rs. 500000 or less. The quantum of maximum rebate will be Rs.12500/-.

iv) Tax Slab Rate for Domestic Company:

A domestic company is taxable at 30%. However, tax rate is 25% if turnover or gross receipt of the company does not exceed Rs. 50 crore.

Plus:

Applicable surcharge: 

7% of tax where total income exceeds Rs. 1 crore

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

Applicable Education cess

4% of tax plus surcharge

v) Tax Rates for Foreign Company:

A foreign company is taxable at 40%

Plus:

Applicable surcharge: 

2% of tax where total income exceeds Rs. 1 crore

5% of tax where total income exceeds Rs. 10 crore

Applicable Education cess:

 4% of tax plus surcharge

vi) Income Tax Slab for Co-operative Society:

Taxable income Tax Rate
Up to Rs. 10,000 10%
Rs. 10,000 to Rs. 20,000 20%
Above Rs. 20,000 30%

Plus:

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

Education cess: 4% of tax plus surcharge

vii) Notional Rent on second self occuppied house property exempt from tax u/s 23

Home-owners will not be required to pay tax on notional rent if they have more than one self-occupied property. According to the budget proposals, exemption has been proposed on the income tax from the notional rent on second –self-occupied house. This benefit is applicable for a person occupy two self occupy house property.

viii) TDS threshold limit raised

To benefit small depositors and non-working spouses, TDS threshold limit has been proposed to be hiked to Rs 40,000 from the current of Rs 10,000 u/s 194A wef 01.04.2019

TDS threshold limit on rent paid or payable has been proposed to be hiked to Rs 2,40,000/-  from Rs. 1,80,000/- in a financial year u/s 194I

ix) Sell 1, buy two houses

Currently capital gain arising from transfer of house property is exempt u/s 54 on purchase or construction of one residential house property within the stipulated time. From the AY 2020-21 in order to save tax on long-term capital gains on the sale of house property one can invest capital gains in two house properties instead of one but this benefit is available once in a lifetime only if capital gains do not exceed Rs 2 crore.

More Under Income Tax

13 Comments

  1. Sateesh Desai says:

    I was getting my pension on 1st of every month. My employer changed it to last day of the month. With this change I got pension for 13 months during 2019-20. With this my income went beyond Rs.5,00,000/-. With 12 months pension I would have been exempted from Income Tax. Now I have to pay Tax for the entire amount exceeding Rs.2,50,000/-. What is the solution.

  2. A Krishnamurthy says:

    I have sold a vacant plot on 11-11-2019.I am jointly having an apartment with my wife.Can I purchase the share of my wife in that apartment using capital gains from the site and claim exemption

  3. A Krishnamurthy says:

    I have purchased a residential house on 16-08-2018 with capital gains arising from sale of a house sold on 25-05-2018.Can I sell it after 16-08-2020 and get long term capital gains exemption as per the new rules

  4. ATCHUT GAUNEKAR says:

    You said above that income upto 500000 no tax is required to pay but under table you said the tax is payable on income exceeding 2.5 lakh

    1. Yuvraj Pradhan says:

      Nothing mentioned above is wrong……..
      Income up to 2.5 Lakhs is exempt
      Balance 2.5 Lakhs is taxable @5% that is 12500
      But above 12500 will be fully compensated by the Rebate of Rs 12500 u/s 87A of Income Tax Act.
      Thus Actual Tax Liability will be NIL

  5. sudershan prakash raja says:

    Under point no. (iii) the lines “From the AY 2020-21 this rebate is available only if the total annual taxable income is upto Rs. 500000 or less. ” is ambiguous.

    1. Chandra Prakash Morjal says:

      Dear Sudershan, there is no ambiguity. Existing calculation method need not be changed for those whose taxable income exceeds Rs.500000. Under the point no. (iii) is applicable to those whose taxable income does not exceed Rs.500000 u/s 87A. It means “no tax” for those whose taxable income does not exceed Rs.500000.

      1. Chandra Prakash Morjal says:

        Dear Sudershan, even for those whose taxable income is Rs.500000 or less, I think they have to file ITR and they will get refund if tax at source is deducted because of the amendment u/s 87A.

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