In the live Union Budget of 2019, the finance minister of India Mr Piyush Goyal has made some important announcements related to the changes in Tax-Slab rates. The 2019 budget has come up as a major relief for middle-class tax payers, as the finance minister has proposed that full tax rebate will be given to the individuals whose gross income is up to Rs. 5 lakh. Moreover, no income tax will be charged on those whose gross income is Rs 6.5 or above, provided he/she invests in any of the investment tools.
Let’s take a look at the income tax slab rate for financial year (FY) 2019-20:
|Income Range||Income Tax|
|Upto Rs. 5 Lakh Taxable Income||Nil - Full Tax Rebate|
|Rs. 5,00,001 to Rs. 10,00,000||Rs 12500 + 20% on income above 5 Lakh|
|Above Rs. 10 Lakh||Rs 1,12,500 + 30% on income above 10 Lakh|
Further adding to his statement Mr Goyal said that an additional deduction like interest on education loan, interest on a home loan up to Rs. 2 Lakh, medical insurance, contribution towards National Pension Scheme, medical expenses on a senior citizen, etc. will not have to pay any tax even if the income of an individual is higher. This will offer tax rebate of Rs.18, 500 crores to an approximate of 3 crore middle-income tax payers including small business, self-employed, salaried person, small traders, senior citizens, and pensioners.
However, after the Lok Sabha elections, the responsibility of implementation of full tax rebate will fall on the shoulders of the next government.
As stated by Mr. Piyush Goyal the standard deduction would be increased from Rs. 40,000 to Rs. 50,000. In budget 2018 the finance minister Mr. Arun Jaitley presented a standard deduction of Rs. 40,000 for salaried class. In substitute for the existing deduction of Rs. 19,200 for transport and Rs. 15,000 for medical reimbursement, the additional deduction was proposed.
Mr Goyal also said that for the benefit of the individuals, the tax interface will be made simpler so that it can increase the return fillings and collections. The union minister mentioned that tax survey will be done electronically and there will be no communication between tax payers and tax authority.
The tax interface would be made simpler, resulting in an increase in tax collections and return filings, said Mr Goyal. He also mentioned that the direct tax collections were up from Rs. 6.38 lakh crore in 2013-14 to almost Rs. 12 lakh crore. He said the tax base was also up from Rs. 3.79 crore to Rs. 6.85 crore.
Previously in budget 2018, the cess on income tax was increased to 4% from 3% by the finance minister Arun Jaitley across the board of taxpayers. However, the tax slab and income tax rates remained the same.
According to the slab presented in the last budget, the tax exemption was applicable up to Rs.2.5 lakh for individuals below 60 years. 5% tax was imposed for income between Rs. 2.5 lakh to Rs. 5 Lakh; 20% tax was imposed on income between Rs. 5 lakh- Rs. 10 lakh and 30% tax on income above Rs. 10 lakh.