Budget 2019 Income Tax slabs - No Income tax up to 5 Lakhs

No Income tax up to 5 Lakhs - Property Adviser
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10:20 AM 08 Feb 2019

As per the Budget 2019 proposals the Finance Minister Piyush Goyal on Friday, 1 February, announced that individual taxpayers with the taxable annual income of up to Rs 5 lakh would get a full tax rebate.

Goyal said, the income tax returns will now be processed within 24 hours, and returns will be paid immediately. All the tax scrutiny will be done electronically, without any intervention by officials.

What is Rebate u/s 87A Income Tax act?

The 87A rebate was introduced in Budget 2013. The purpose of this rebate is to decrease the tax burden of individuals in the lower income bracket. Before Budget 2019, the tax rebate up to Rs 2,500 was allowed to individuals who had annual taxable (after all deductions) income up to Rs 3,50,000. In budget 2019, tax benefit has been extended to Rs 12,500 for people having taxable yearly income up to Rs 5,00,000. This would be applicable for Financial Year 2019-20 (Assessment Year 2020-21).

Let us know in detail about the Interim Budget 2019 proposals in below points.

Interim Budget 2019 Highlights:

  • The Individual taxpayers with an annual income up to Rs 5 lakh will get a full tax rebate.
  • Tax deduction at TDS threshold on interest for bank and post office deposits raised from Rs 10,000 to Rs 40,000.
  • Standard tax deduction for the salaried persons raised from Rs 40,000 to Rs 50,000.
  • Around three crore middle-class taxpayers will get tax exemption due to this measure.
  • People with total gross income up to Rs 6.5 lakhs will no need to pay tax if they make any investments in provident funds and prescribed equities.

Eligibility to Claim Rebate Under Section 87A For FY 2019-20 (AY 2020-21)

You can claim tax rebate under this provision if you meet the following conditions:

  • You must be a resident individual and your net Income, tax deductions (under Section 80) should be equal or less than Rs 5 lakhs.
  • The rebate is limited to Rs 12,500. If your total tax payable is lower than Rs 12,500, then that amount will be the rebate under section 87A.
  • The rebate is applied to the total tax before adding the Education Cess (4%).

The 87A rebate allowed to resident individuals is shown in below table.

Total Income

   Tax payable before cess

   Rebate u/s 87A

 Tax Payable + 4% Cess

    2,70,000

                  1,000

            1,000

                    0

    3,60,000

                  3,000

           3,000

                    0

   5,40,000

                 20,500

               0

                 21,320

  12,00,000

                1,72,500

               0

                1,79,400

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By: Shailaja K