On Feb 1, 2019 Shri Piyush Goyal, the Interim Union Finance Minister, presented the Interim Budget 2019-20 in the Parliament.
As such, no change has been proposed in the income tax slabs and rates, still, there have been following 2 major changes in the interim budget for FY 2019-20 for income tax payers in India:
Suggested reading Budget 2019-20 Highlights
Looking to it, you may feel that you may not have any benefit, if your income is above Rs 5 lakhs in a year but the fact is quite different. One must understand that there is a full rebate on "NET TAXABLE INCOME" and not the gross income.
Let us make it clear with an example as to how to avoid paying income tax even when your income is over Rs 10 lakhs:
Suppose you are a salaried person below 60 years of age and your gross total income is Rs 10.75 lakhs in one year. Then you can avoid paying a single paisa as income tax in the FY 2019-20 as per intereim budget. The calculations have been shown below in order to present a more clear picture:
Particulars | Amount (Rs) |
---|---|
Salary drawn by you | 10,75,000 |
Standard Deduction | (-)50,000 |
Home Loan Interest Deduction (Section 24) | (-)2,00,000 |
Section 80C Deduction | (-)1,50,000 |
Investment in National Pension Scheme (NPS) | (-)50,000 |
Health Insurance Premium (self) | (-)25,000 |
Health Insurance Premium (senior citizen parents) | (-)50,000 |
Deduction towards donation | (-)25,000 |
Deduction towards Education Loan (children) | (-)25,000 |
NET TAXABLE INCOME | 5,00,000 |
INCOME TAX PAYABLE | 12,500 |
REBATE UNDER SECTION 87A | (-)12,500 |
TAX LIABILITY | NIL |
With the help of above example, you can see that after all the deductions, your net taxable income will come down to Rs 5,00,000 and you can get full rebate under section 87A.
Suggested reading Updated Income Tax Slabs FY 2019-20
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