Budget 2019: No tax on income up to ₹5 lakh, standard deduction raised
1 min read 01 Feb 2019, 12:44 PM ISTGovt increases income tax exemption limit to Rs. 5 lakh per year.No TDS on post office savings up to Rs. 40,000
PremiumThe rebate under section 87A of Income tax Act 1961, which is available since assessment year 2014-15 is raised to ₹12,500 from existing ₹2,500. The amount of rebate is 100% of income tax payable on the total taxable income of up to ₹5 lakh. A rebate is the amount of tax the tax payer is not liable to pay. Total taxable income or net taxable income is the income after taking into account deductions.
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So in next fiscal, if an assessee has an income of up to ₹5 lakh in the financial year, she is allowed to claim the entire tax payable as tax rebate. For instance, if an assessee is having a gross income of ₹6.5 lakh for the financial year 2019-20, and makes an investment of ₹1.5 lakh under section 80C her net taxable income comes down to ₹5 lakh, on which her tax liability would be ₹12,500 (5% of ₹2.5 lakh) excluding cess (income upto ₹2.5 lakh is exempt from tax). However, as her income is up to Rs5 lakh in the particular financial year, she is liable to claim a rebate of ₹12,500 and thus her net tax payable would be zero. This means while the tax payer is still liable to file her returns, the tax payable is zero.
