The 2019 Interim Budget was presented on 1 February 2019 by the interim Finance Minister Piyush Goyal. The biggest announcement this time is the fact that incomes up to the extent of Rs.5 lakh will be exempt from tax. In addition to that, the standard deduction has also been increased to the extent of Rs.50,000 now, as opposed to the previously prevalent amount of Rs.40,000.
Five key things to know
- The interim Budget has not proposed to change any income tax slabs for any citizen category in the Budget 2019-20. However, Finance Minister has proposed that individual taxpayers having “taxable annual income up to Rs 5 lakhs” will get “full tax rebate”. All the applicable income tax rates have also kept unchanged.
- Further, individuals having an annual income of Rs 6.5 lakh can also save income taxes, provided they invest a sum of up to Rs 1.5 lakh in prescribed savings schemes under Section 80C of the Income Tax Act such as Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), National Saving Certificates (NSC), insurance schemes, etc.
- An individual is also eligible to claim income tax deductions from of up to Rs 2 lakh on interest home loans, education loans, National Pension Scheme (NPS) contributions, medical insurance, medical expenditure on senior citizens.
- Budget has also proposed to increase the standard deduction by Rs 10,000 to Rs 50,000 from the present Rs 40,000. Therefore, going forward, all the salaried persons can claim a standard deduction of Rs 50,000 on their respective taxable income.
- Other than this, interim Finance Minister has proposed to exempt the income tax payable on notional rent on the second self-occupied house. As of now, income tax is payable on the notional rent if an individual has more than one self-occupied house.
What is the Tax-Free limit for 2019-20?
There will be no tax on income up to Rs 5 lakh. Over 3 crore salaried class, pensioners, self-employed and small businesses with total income of up to Rs 5 lakh will save Rs 10,900 in income tax annually after considering the relief acting Budget provided in form of a ‘rebate’. For those making investments of Rs 1.5 lakh in tax saving instruments, the tax-free income would be Rs 6.5 lakh.
What is the Income Tax slab for 2019-20?
The government hasn’t changed the income tax slabs. This means that those who are earning more than Rs 5 lakh will have to pay the tax at the same rate as before. Finance Minister said that the current tax slab of 20 per cent for income between Rs 5-10 lakh and 30 per cent for income over Rs 10 lakh respectively will continue as it is in the next fiscal year starting April 1, 2019.
What is the Income Tax limit for Senior and Super Senior Citizens?
Senior citizens aged 60 years or above but less than 80 years with an income of up to Rs 3 lakh are exempted from paying tax. However, income between Rs 300,001 to Rs 5 lakh will be taxed 5 per cent, while income from Rs 500,001 to Rs 10 lakh will be taxed at 20 per cent and those above Rs 10 lakh will be taxed at 30 per cent respectively.
Super senior citizens (aged 80 years and above), with an income of up to Rs 5 lakh, will be exempted from paying tax. While income between Rs 500,001 to Rs 10 lakh will be taxed at 20 per cent, those above Rs 10 lakh will be taxed at 30 per cent.
How to calculate Income Tax for the AY 2019-20?
There are several factors that are taken into account while determining income tax. Presently, the income tax slabs and exemption limits for the assessment year 2019-20 and 2018-19 are divided as per age and residential status.
The three major components for computing income tax are gross taxable income, HRA exemption, and transport allowance.
HRA, for instance, is calculated on the basis of your basic salary. But it is also dependent on other factors, such as the city you reside in. People staying in a metropolitan or tier-1 city, their HRA will come to 50 per cent of their salary, while it’s 40 per cent of the salary in all other cities.
Transport allowance, which is a component of your salary, is also tax exempted. Note that the maximum annual tax exemption limit stands at Rs 19,200. If you exceed the limit, you are liable to pay tax.
Aside from the usual deduction under 80C, a person can also claim additional tax benefits under Section 80D, Section 80EE, Section 80E, and Section 80CCD.
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