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:
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