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Business News/ Budget / News/  Budget 2019: No tax on income up to 5 lakh, standard deduction raised

Budget 2019: No tax on income up to ₹5 lakh, standard deduction raised

Govt increases income tax exemption limit to Rs. 5 lakh per year.
  • No TDS on post office savings up to Rs. 40,000
  • Currently, income up to ₹2.5 lakh is exempt from personal income tax. Photo: Pradeep Gaur/MintPremium
    Currently, income up to 2.5 lakh is exempt from personal income tax. Photo: Pradeep Gaur/Mint

    The 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.

    Budget 2019 LIVE updates: Catch all the updates

    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. 

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    Published: 01 Feb 2019, 12:44 PM IST
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