There is no change in tax slab in budget 2019, Clarification on 5Lakhs annual income tax Rebate
There is Wrong perception created about NO Income Tax upto Rs 5 lakh to all tax payer. Actually Income Tax is still payable @ 5% on Income upto Rs 5 lakh
Finance Minister while presenting the Budget speech has clearly stated that there will not be any Income Tax on Income up to Rs 5 lakh, but when Finance Bills came on the records it clears the myth spread on the news media and other websites.
As per the Clause 8 of the Bill seeks to amend section 87A of the Income-tax Act to provide relief to the individual taxpayers by increasing the maximum amount of tax rebate to twelve thousand five hundred rupees from existing two thousand five hundred rupees.
The tax rebate shall now be admissible to taxpayers having total income up to five hundred thousand rupees, instead of existing three hundred fifty thousand rupees.
No tax upto total taxable Income of 5Lakh is in the form of rebate under section 87A which means It will be available to only those Individuals whose Total Taxable Income is less than or equal to 5Lakh (after availing all available deductions).
There is no change in Tax slabs and there is no exemption to those Individuals whose total Taxable Income (after all deductions) is more than 5Lakh.
Earlier Rebate u/s 87A was upto Rs 2,500 for individuals having Total income upto Rs 3,50,000
Now Rebate u/s 87A is upto Rs 12,500, for individuals having Total income upto Rs 3,50,000
It means for when total income upto 5L, then no tax. If total income exceeds 5L, same tax as before. Only 10,000 additional benefit of standard deduction.
This has been explained with the below mentioned Example:
|Particulars||Situation 1||Situation 2|
|Computation of Income|
|Rebate U/S 87A||-12500||0|
|Add : Cess @ 4%||0||501|
|Net Tax Liability||0||13021|
Individual taxpayers having taxable annual income up to Rs.5 lakhs will not be required to pay any income tax. The Finance Minister said that persons having gross income up to Rs. 6.50 lakhs are not required to pay any income tax if they make investments in provident funds, specified savings and insurance etc.[/su_table]
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