NEW DELHI: In the interim budget, finance minister Piyush Goyal has not changed the income tax slabs for the financial year 2019-20 but has provided relief to middle-class salaried taxpayers by rebates and increasing the standard deduction threshold.

Clause 8 of the Finance Bill introduced in parliament on Friday seeks to amend section 87A of the Income Tax Act to provide relief to individual taxpayers by allowing a rebate on annual income of up to 5 lakh.

For salaried persons, standard deduction has been raised from the current 40,000 to 50,000. This will provide an additional tax benefit of 4,700 crore to more than 3 crore salary earners and pensioners.

In the ongoing 2018-19, income up to 2.5 lakh is not taxable for individuals below the age of 60. Those above 60 years but less than 80 years enjoy a tax-free income of up to 3 lakh while for those above 80 the tax-free income goes up to 5 lakh.

According to the current slabs, if total income is more than 2.5 lakh but up to 5 lakh, then the total tax outgo is 5% of the amount by which the total income exceeds 2.5 lakh. For income between 5 lakh and 10 lakh, the tax outgo is 20% of the amount by which the total income exceeds 5 lakh plus 12,500.

In the 2019-20, a rebate has been given to only those who fall in the 5 lakh slab. Together with the increase in the standard deduction, the total tax saving is 13,520.

Income tax rates for individuals below 60 years:

Net Income after 80C deduction Tax Benefit
AY 2019-20 AY 2020-21 AY 2019-20 AY 2020-21
Net Income Increase in Standard Deduction Net Income
5,10,000 10,000 5,00,000 13,520 - 13,520
10,60,000 10,000 10,50,000 1,35,720 1,32,600 3,120
58,10,000 10,000 58,00,000 17,79,492 17,76,060 3,432
1,08,10,000 10,000 1,08,00,000 36,54,378 36,50,790 3,588


Income tax rates for senior citizens:

Resident Individual who is a senior citizen
Pre -Budget
Net Taxable Income (after deductions) 300,000 350,000 400,000 500,000 1,000,000
Tax - 2,500 5,000 10,000 110,000
Rebate - 2,500 - - -
Balance Tax - - 5,000 10,000 110,000
Cess - - 200 400 4,400
Total - - 5,200 10,400 114,000


Post -Budget
Net Taxable Income (after deductions) 300,000 350,000 400,000 500,000 1,000,000
Tax - 2,500 5,000 10,000 110,000
Rebate - 2,500 5,000 10,000 -
Balance Tax - - - - 110,000
Cess - - - - 4,400
Total - - - - 114,000
Saving - - 5,200 10,400 -

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