Budget 2019: Income Tax exemption limit and rates

Budget 2019 Income Tax Slab Rates Changes Expectations: Individuals have gross income of Rs 6,50,000 (Six lakh fifty thousand) will have not pay tax if they make an investment. Goyal also said standard deduction would be hike from Rs 40,000 (Forty Thousand) to Rs 50,000 (Fifty Thousand).

Budget 2019-20 India Income Tax Slab Rates Changes: Announcing the Interim Budget, acting finance minister Piyush Goyal on Friday proposed that individuals earning up to Rs 5,00,000(Five lakh) will be exempted. This will provide tax saving of up to Rs 12,500 (Twelve thousand five hundred) for all taxpayers in this bracket. Those who save more can effectively push this rebate up to an income of Rs 6 lakh 50 thousand.

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

Mr. Goyal also announced that there will be no tax on interest income of up to Rs 40,000. However, after the Lok Sabha elections, they left the implementation for the next government for the full budget.

Goyal also said standard deduction would be hiked from Rs.40,000to Rs.50,000. Finance Minister Arun Jaitley had in Budget 2018 presented a standard deduction of Rs.40,000 for the salaried class. This additional deduction was proposed for existing deductions of Rs.15,000 for medical reimbursement and Rs.19,200 for transport allowance.

“Individual taxpayers having taxable annual income up to Rs 5 lakh will get a full tax rebate and hence they will not be required to pay any income tax. As a result, even those earning gross income up to Rs 6 lakh 50thousand may not be required to pay any income tax if they investing in provident funds, specified savings, insurance etc,” Goyal said

“In fact, with additional deductions such as interest on home loan up to Rs 2 lakh, National Pension Scheme contributions, interest on education loans, medical expenditure on senior citizens, medical insurance etc,persons having even higher income will not have to pay any tax. This will provide a tax benefit of Rs 18 lakh 500 hundred crore to an estimated three crore middle-class taxpayers comprising self-employed, small business, small traders, salary earners, pensioners and senior citizens.”

How much tax will you save?

Income between Rs 2.5lakh and Rs 5 lakh

income between 2.5 lakh to 5 lakh

Income between Rs 5lakh and Rs 6 lakh

income between 5 lakh to 6 lakh

Income between Rs 6lakh and Rs 10 lakh

income between 6 lakh to 10 lakh

Income above Rs 10 lakh

income above 10 lakh

Goyal further said that the tax interface would be simplified,resulting in an enhancement in tax collections and return filings. The Union minister said that tax investigation (scrutiny) would be done electronically and there will be no interaction between the tax authority and the taxpayer.

“In almost two years, almost all assessment and verification of IT returns will be done electronically by an anonymized tax system without any interference by officials. All income tax returns to will be processed within 24 hours and refunds will be issued simultaneously,” Goyal said.

He said that direct tax collection in 2013-14 increased from Rs 6.38 lakh crore to about 12 lakh crore rupees. He said that tax base was up from Rs 3.79 crore to Rs 6.85 crore.

Following a drubbing in the elections to the three Hindi states of Chhattisgarh, Rajasthan and Madhya Pradesh amid growing resentment among the middle class, they pressuring the Centre to provide relief.

In the Budget 2018, then Finance Minister Arun Jaitley increased income tax cess for taxpayers from 3% to 4% across the board, but did not change the existing tax slabs and income tax rates.

According to the announced slab in the previous budget,income of up to Rs 2 lakh 5 fifty thousand was exempted from taxes for persons below 60 years. Income between Rs 2,50,001 to Rs 5 lakh was levied on five percent; 20 percent tax on income between Rs 500,001 and Rs 10 lakh; And 30percent tax on income above Rs 10 lakh.

For Senior Citizens (60 years of age or older), income up to Rs. 3 lakhs were exempted from tax. Taxes of 5 percent were levied on income of Rs 300,001 to 5 lakh rupees, From Rs 500,001 to Rs 20 lakh to Rs 10 lakh and up to 30 lakh 30 percent.

For senior citizens of 80 years and above, income up to Rs 5lakh was exempt from tax. 30 percent tax on income of Rs 500,001 to Rs 10 lakh and income of more than Rs 10 lakh was levied on income.