Interim budget 2019 was presented by Finance Minister Piyush Goyal in the Lok Sabha on February 01. One of the major proposals that gained attention was the relief proposed for middle-class taxpayers.
Now, the issue is that there has been no proposal to alter existing tax slabs, however, the general perception is that there has been a change in tax slab.
“For the present, the existing rates of income tax will continue for FY 2019-20 also. I propose the following changes – Individual taxpayers having annual taxable incomes up to Rs 5 lakh will get full tax rebate,” Goyal said in the Lok Sabha.
— BJP (@BJP4India) February 1, 2019
The statements means that the government has not proposed to alter tax slabs, but, has proposed to give taxpayers full rebate in case they pay more than their tax liability.
According to the current tax slabs, which the Finance Minister said will continue for FY 2019-20, individuals having an income of up to Rs. 2.5 lakhs do not have to pay taxes.
Above Rs. 2.5 lakh but not more than Rs. 5 lakh, taxpayers are liable to pay 5% tax on the amount exceeding Rs. 2.5 lakh. For example, if your income is Rs. 4 lakh, then you are required to pay tax on Rs. 1.5 lakh (Rs. 4 lakh – Rs. 2.5 lakh)
When the total income is more than Rs. 5 lakh annually but not more than Rs. 10 lakh, taxpayers are required to pay Rs. 12,500 plus 20% on the amount over and above Rs 5 lakh. For instance, if your salary is 8 lakh annually, then you will have to pay a tax of Rs. 72,500 (12,500 + 20% of 3,00,000).
When annual income exceeds Rs. 10 lakh, then tax of Rs. 1,12,500 plus 30% on the amount over and above Rs 10 lakh is to be paid.
The slabs mentioned above will continue to remain in the same form for this financial year. The government has only proposed to give a full rebate to taxpayers having Rs. 5 lakh annual taxable income. A person having an annual income of Rs. 8 lakh will still have to pay tax of Rs. 5.5 lakh as the exemption is only till Rs. 2.5 lakh.
Let’s now try to understand the difference between TAX EXEMPTION and TAX REBATE
Tax exemption is given up to Rs. 25 lakh. It is the income, expenditure and investment on which no tax is levied.
Tax rebate is a relief provided to taxpayers in the form of tax refund in case they pay more than their tax liability. The amount of rebate available under section 87A of the Income Tax Act is Rs. 2,500 or the amount of tax payable, whichever is less.
A change in Section 87A has been proposed by the government. As Finance Minister said that individual taxpayers having annual taxable income up to Rs 5 lakh will get full tax rebate, this means that the taxpayer can get a rebate of Rs. 12,500 (5% of Rs 2.5 lakh).
Credit: Alt News