The Interim Budget of financial year 2019-2020 (Assessment year 2020-2021) was presented on February 1, 2019 by the interim Finance Minister of India, Mr. Piyush Goyal. The key changes proposed in the budget that directly affects the salary earning employees of India are listed in the following sections of this page. Employees with up to Rs.5 lakh of annual income will be exempt from tax as this budget comes in effect in April 2019. 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.

Increased Tax Rebate u/s 87A

Individual taxpayers having taxable annual income up to 5 lakhs will get full tax rebate and therefore will not be required to pay any income tax. As a result, even persons having gross income up to ` 6.50 lakhs may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc. The rebate of Rs 2500 available under section 87A, for the person having taxable income up to Rs 3.50 lakh has been Increased to Rs 12500, and that too for the person having total taxable income (Income after all available deductions) of Rs 5 lakh. This means if you have a Taxable income of Rs 5 lakh or less, you will get a full rebate and you need not pay any income tax.

Increase in Standard Deduction

For salaried persons, Standard Deduction is being raised from the current Rs. 40,000 to Rs. 50,000.

No Tax on Notional Rental Income from Second House

In the previous financial year 2018-2019, income tax on notional rent is payable if one has more than one self-occupied house. Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children’s education, care of parents etc. I am proposing to exempt levy of income tax on notional rent on a second self-occupied house.

Increase in TDS threshold on interest earned on bank/post office deposits

Threshold of deducting TDS on interest income from Bank, Post Office or co-operative deposit has been increased from Rs 10,000 to Rs 40,000.

Income Tax Slab for the financial year 2019-2020

The income tax slab is a table that shows the threshold limit beyond which a specific tax rate is applicable and various deductions are made as per the applicable rate. The normal tax rates applicable to a resident individual will depend on the age of the individual. However, in case of a non-resident individual the tax rates will be same irrespective of his age. For the purpose of ascertainment of the applicable tax slab, an individual can be classified as follows:

  • Resident individual below the age of 60 years.
    Income Tax Slab 2019-2020 - Below age 60 years
    Surcharge is levied @ 10% on the amount of income-tax if net income exceeds Rs 50 Lakh but doesn’t exceed Rs. 1 crore and @ 15% on the amount of income tax if net income exceeds Rs. 1 crore. In a case where surcharge is levied, health and education cess of 4% will be levied on the amount of income tax plus surcharge

  • Resident individual of the age of 60 years or above at any time during the year but below
    the age of 80 years.
    Income Tax Slab 2019-2020 - a resident individual of the age of 60 years or above but below the age of 80 years
    Surcharge is levied @ 10% on the amount of income-tax if net income exceeds Rs 50 Lakh but doesn’t exceed Rs. 1 crore and @ 15% on the amount of income tax if net income exceeds Rs. 1 crore. In a case where surcharge is levied, health and education cess of 4% will be levied on the amount of income tax plus surcharge
  • Resident individual of the age of 80 years or above at any time during the year.
    Income Tax Slab 2019-2020 - of the age 80 years or above at any time during the year
    Surcharge is levied @ 10% on the amount of income-tax if net income exceeds Rs 50 Lakh but doesn’t exceed Rs. 1 crore and @ 15% on the amount of income tax if net income exceeds Rs. 1 crore. In a case where surcharge is levied, health and education cess of 4% will be levied on the amount of income tax plus surcharge
  • Non-resident individual irrespective of age.
    Income Tax Slab 2019-2020 - Non resident individual irrespective of age
    Surcharge is levied @ 10% on the amount of income-tax if net income exceeds Rs 50 Lakh but doesn’t exceed Rs. 1 crore and @ 15% on the amount of income tax if net income exceeds Rs. 1 crore. In a case where surcharge is levied, health and education cess of 4% will be levied on the amount of income tax plus surcharge