The rebate under Section 87A of the Income Tax Act, has been enhanced to Rs 12,500 from Rs 2,500 earlier
In a move to give relief to the middle class, Finance Minister Piyush Goyal announced in the Budget 2019 that individual taxpayers will get a full tax rebate for income earned up to Rs 5 lakh.
Previously, the income threshold on which rebate was given was Rs 3.5 lakh. Individuals will now get a benefit of Rs 12,500, up from Rs 2,500 earlier. This will benefit taxpayers only to the extent of an annual income of Rs 5 lakh. The basic exemption limit and tax-slabs remain the same.Additionally, Piyush Goyal also announced an increase in standard deduction to Rs 50,000, up from Rs 40,000 earlier.
So if you earn upto Rs 9.25 lakhs will not pay tax https://t.co/es9V5MciQo
— Mrin Agarwal (@mrinagarwal) February 1, 2019
To be sure, this is a rebate for those whose taxable incomes are up to Rs 5 lakh. The basic exemption limit of Rs 2.5 lakh - that is, no tax to be paid for those who earn an income of up to Rs 2.5 lakh - continues.
All the tax slabs also continue. In other words, if your taxable income is higher than Rs 5 lakh, you still pay tax at the existing income tax slabs.
But did you know that you can still get a salary of up to Rs 10 lakh and still get the benefit of this rebate? Here's how.
In the above example, existing deductions under Income Tax Act under section 80C along with contribution to NPS (Section 80CCD1B), interest paid on home loan (Section 24) and health insurance premium paid (Section 80D; for both yourself and your senior citizen parents) has helped the individual to bring down his taxable income to Rs 5 lakh, according to Mrin Agarwal, founder of Finsafe.
This will ensure that his income tax liability is reduced to zero if he files his income tax returns.Catch all updates on Union Budget 2019-20 in our live blogThe Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .