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|
|Cess @ 4%||0||0||0||4,500|
|Tax payable (after cess)||0||0||0||117,000|
|Budget 2018 examples|
The government will announce its full-year budget for the current financial year on July 5, farm minister Narendra Tomar said in May.