Interim Budget 2019: How Your Income Tax Liability Is Set To Change From Assessment Year 2020-21

Interim Budget 2019: How Your Income Tax Liability Is Set To Change From Assessment Year 2020-21

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.
In the interim Budget, the last Budget announced ahead of the general election which concluded in May this year, the government announced the following measures, among others:
Full tax rebate on annual personal income up to Rs. 5 lakh; in other cases; income tax rates/slabs unchanged
Standard deduction limit raised from Rs. 40,000 (Budget 2018) to Rs. 50,000
Hike in TDS (tax deducted at source) threshold applicable to interest earned on bank/post office deposit
Experts have shared few examples to explain the changes in income tax liability as per the proposed changes in laws:

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.

Source: ndtv

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