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

3 Comments

  1. 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.

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