The government announced a few changes in income tax rules in interim budget earlier this year. Key changes in the income tax law included a full tax rebate on annual income up to Rs.5 lakh and a 25 per cent hike in standard deduction allowed to salaried individuals and pensioners. These income tax rules will come into force from Assessment Year 2020-21 (financial year 2019-20). Careful planning of investments as per income tax laws can lead to a significant reduction in the assessees' overall tax outgo, say financial advisors.
| Budget 2019 tax calculation examples | ||||
|---|---|---|---|---|
| Taxable annual income in rupees (after adjusting deductions) | 350,000 | 400,000 | 500,000 | 1,000,000 |
| Tax | 5,000 (@ 5% on 1,00,000) | 7,500 (@ 5% on 1,50,000) | 12,500 (@ 5% on 2,50,000) | 1,12,500 (@5% on 2,50,000, 20% on 5,00,000) |
| Rebate under Section 87A of I-T Act | 5,000 | 7,500 | 12,500 | NA |
| Tax liability | 0 | 0 | 0 | 112,500 |
| Cess @ 4% | 0 | 0 | 0 | 4,500 |
| Tax payable (after cess) | 0 | 0 | 0 | 117,000 |
| Budget 2018 examples | ||||
| Taxable income | 350,000 | 400,000 | 500,000 | 1,000,000 |
| Tax | 5,000 | 7,500 | 12,500 | 112,500 |
| Rebate | 2,500 | NA | NA | NA |
| Balance Tax | 2,500 | 7,500 | 12,500 | 112,500 |
| Cess | 100 | 300 | 500 | 4,500 |
| Tax payable | 2,600 | 7,800 | 13,000 | 117,000 |
The government will announce its full-year budget for the current financial year on July 5, farm minister Narendra Tomar said in May.
