Last updated on February 16th, 2021 at 01:16 pm
Budget 2019: Tax slab change or tax rebate?
In the big bang budget today, the Interim Finance Minister, Piyush Goyal announced one of the most speculated tax break i.e. tax exemption up to Rs 5 lakhs. Let us understand this provision as this is currently a topic of debate as to whether this is a slab change or a rebate.
- Individual taxpayers having taxable annual income up to 5 lakhs to get a full tax rebate under section 87A (i.e. approx. Rs 12,500) and therefore will not be required to pay any income tax.
- At the same time, the FM also mentioned that ” for now the existing rates of income tax will continue for FY 2019-20″
To clarify, we would like to mention that Rebate under section 87A is provided to individuals earning an income below the specified limit. Hence, to claim this relief, the following conditions should be satisfied:
- You must be a resident individual in India and
- Your total income, less Deductions, (under Section 80) should be equal to or less than Rs. 5 lacs.
With respect to this provision, various questions arise:
Whether an individual earning Rs 4 lacs is not required to file the tax return next year as his income is not taxable?
No. The individual is required to file the income tax return as he falls under the taxable slab of Rs 2.5 lacs to Rs. 5 lacs. However, he/she will claim the Rebate for income under Rs 5 lacs and pay “Nil” tax or claim the refunds.
Whether an individual earning Rs 8 lacs can claim the relief under sec 87A and get tax benefit upto Rs 5 lacs?
No. The rebate is applicable only for the marginal income earners and hence if your income less deductions u/s 80 is more than Rs 5 lacs, you will get charged at the normal tax slabs.
What are the slab rates for FY 19-20?
Unless changed in the Full budget that will be done in May 2019, the slab rates will remain the same as those in FY 18-19.
| Particulars | Non-Senior citizen |
| Age | Below 60 years |
| Upto Rs. 2.5 lakh | Nil |
| 2.5lakh to 5 lakh | 5% |
| 5 lakh to 10 lakh | 20% |
| Above 10 lakh | 30% |
| Particulars | Senior Citizen |
| Age | Between 60 to 80 |
| Upto Rs. 3 lakh | Nil |
| 3 lakh to 5 lakh | 5% |
| 5 lakh to 10 lakh | 20% |
| Above 10 lakh | 30% |
| Particulars | Super Senior Citizen |
| Age | Above 80 years |
| Upto Rs. 5 lakh | Nil |
| 5 lakh to 10 lakh | 20% |
| Above 10 lakh | 30% |
Will HUF earning Rs 5 lacs get the same relief?
No. The rebate of Rs 5 lacs is available only to “individual” taxpayers.
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Good efforts in short time.
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Neat and very informative article.
Thank you!