Income tax slabs and rates for AY, FY 2019-20: The Narendra Modi government made a big populist push in its final budget before elections as they exempted people with an earning of up to Rs 5 lakh from payment of income tax, announced an annual cash dole-out of Rs 6,000 to small farmers and provided a monthly pension of Rs 3,000 to workers in the unorganised sector.
Acting Finance Minister Piyush Goyal converted what was supposed to be an interim budget or a vote on account into an almost full-fledged budget announcement in the Lok Sabha, even as he proposed an array of incentives for both middle-class and farmers, whose disenchantment was said to have cost the BJP dearly in recent assembly elections.
What is the tax-free limit for 2019-20?
There will be no tax on income up to Rs 5 lakh. Over 3 crore salaried class, pensioners, self-employed and small businesses with total income of up to Rs 5 lakh will save Rs 10,900 in income tax annually after considering the relief acting Finance Minister Piyush Goyal provided in form of a ‘rebate’. For those making investments of Rs 1.5 lakh in tax saving instruments, the tax-free income would be Rs 6.5 lakh.
For those making investments of Rs 1.5 lakh in tax saving instruments, the tax-free income would be Rs 6.5 lakh.
What is the income tax slab for 2019-20?
The government hasn’t changed the income tax slabs. This means that those who are earning more than Rs 5 lakh will have to pay the tax at the same rate as before. Piyush Goyal said that the current tax slab of 20 per cent for income between Rs 5-10 lakh and 30 per cent for income over Rs 10 lakh respectively will continue as it is in the next fiscal year starting April 1, 2019.
What is the income tax limit for senior and super senior citizens?
Senior citizens aged 60 years or above but less than 80 years with an income of up to Rs 3 lakh are exempted from paying tax. However, income between Rs 300,001 to Rs 5 lakh will be taxed 5 per cent, while income from Rs 500,001 to Rs 10 lakh will be taxed at 20 per cent and those above Rs 10 lakh will be taxed at 30 per cent respectively.
Super senior citizens (aged 80 years and above), with an income of up to Rs 5 lakh, will be exempted from paying tax. While income between Rs 500,001 to Rs 10 lakh will be taxed at 20 per cent, those above Rs 10 lakh will be taxed at 30 per cent.
Same taxation rates are applicable for super senior citizens (above 80 years). The tax exemption threshold for super senior citizens is Rs 5,00,000.
How to calculate income tax for the assessment year 2019-20?
There are several factors that are taken into account while determining income tax. Presently, the income tax slabs and exemption limits for the assessment year 2019-20 and 2018-19 are divided as per age and residential status.
The three major components for computing income tax are gross taxable income, HRA exemption, and transport allowance.
HRA, for instance, is calculated on the basis of your basic salary. But it is also dependant on other factors, such as the city you reside in. People staying in a metropolitan or tier-1 city, their HRA will come to 50 per cent of their salary, while it’s 40 per cent of the salary in all other cities.
Transport allowance, which is a component of your salary, is also tax exempted. Note that the maximum annual tax exemption limit stands at Rs 19,200. If you exceed the limit, you are liable to pay tax.
Aside from the usual deduction under 80C, a person can also claim additional tax benefits under Section 80D, Section 80EE, Section 80E, and Section 80CCD.