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Confused by new Tax Slabs? Read the examples given here
2 February: 2019 being the election year, the Finance Minister has tried to appease the middle class and farmers in the budget by announcing tax rebates and income scheme for farmers. The Budget, however, is a complex draft and often people with less know how of business and economics try it hard to understand the Budget speech or the subtle intricacies therein. Change in your tax liability can be explained further with the examples given here, following the Interim Budget 2019.*
- Individual residents with income less than Rs 5 lakh per annum:
| Particulars | FY 2018-19 (in rupees) | FY 2019-20 (in rupees) |
| Basic Salary + DA | 377,200 | 377,200 |
| Other Taxable Allowances | 172,800 | 172,800 |
| Gross Salary | 550,000 | 550,000 |
| Standard Deduction (deducted) | 40,000 | 50,000 |
| Total Income under the head ‘salary’ | 510,000 | 500,000 |
| Income Tax | 14,500 | 12,500 |
| Rebate under section 87A (deducted) | 0 | 12,500 |
| Total tax payable after Rebate | 14,500 | 0 |
| Surcharge @10% / 15% | 0 | 0 |
| Total tax payable after surcharge | 14,500 | 0 |
| Education Cess @ 4% | 580 | 0 |
| Total tax, surcharge and education cess | 15,080 | 0 |
Total tax saved after budget: Rs 15,080
- Individual residents with income over Rs 5 lakh but less than Rs 10 lakh per annum
| Particulars | FY 2018-19 (in rupees) | FY 2019-20 (in rupees) |
| Basic Salary + DA | 7,77,200 | 7,77,200 |
| Other Taxable Allowances | 2,22,800 | 2,22,800 |
| Gross Salary | 10,00,000 | 10,00,000 |
| Standard Deduction (deducted) | 40,000 | 50,000 |
| Total Income under the head ‘salary’ | 9,60,000 | 9,50,000 |
| Income Tax | 1,04,500 | 1,02,500 |
| Rebate under section 87A (deducted) | 0 | 0 |
| Total tax payable after Rebate | 1,04,500 | 1,02,500 |
| Surcharge @10% / 15% | 0 | 0 |
| Total tax payable after surcharge | 1,04,500 | 1,02,500 |
| Education Cess @ 4% | 4,180 | 4,100 |
| Total tax, surcharge and education cess | 1,08,680 | 1,06,600 |
Total tax saved after budget: Rs 2,080
- Individual residents with income over Rs 10 lakh but less than Rs 50 lakh per annum
| Particulars | FY 2018-19 (in rupees) | FY 2019-20 (in rupees) |
| Basic Salary + DA | 17,77,200 | 17,77,200 |
| Other Taxable Allowances | 12,22,800 | 12,22,800 |
| Gross Salary | 30,00,000 | 30,00,000 |
| Standard Deduction (deducted) | 40,000 | 50,000 |
| Total Income under the head ‘salary’ | 29,60,000 | 29,50,000 |
| Income Tax | 7,00,500 | 6,97,500 |
| Rebate under section 87A (deducted) | 0 | 0 |
| Total tax payable after Rebate | 7,00,500 | 6,97,500 |
| Surcharge @10% / 15% | 0 | 0 |
| Total tax payable after surcharge | 7,00,500 | 6,97,500 |
| Education Cess @ 4% | 28020 | 27900 |
| Total tax, surcharge and education cess | 7,28,520 | 7,25,400 |
Total tax saved after budget: Rs 3,120
The main take away for salaried individuals from the Budget 2019 was the reduced income tax burden. Here is a clear clarification on how the tax on your income for the financial year 2019-20 will be computed.
- Standard deduction has been increased from Rs 40,000 to Rs 50,000
- No income tax will be payable by those who earn an annual income less than Rs 5 lakhs. A tax rebate was announced, which means if your income is Rs 6.5 lakh, you will not have to pay tax as you can additional Rs 1.5 lakhs tax benefit for investments exempt from tax under sec 80C.
