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Month: February 2019

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Key Highlights of Interim Budget 2019 for Individual Tax Payer

Key Highlights of the changes in the interim budget affecting the individual taxpayer are…

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Key Highlights of the changes in the interim budget affecting the individual taxpayer are as under:

Income under the head salaries
Section 16(ia): Limit of Standard deduction from income under the head salary is increased from Rs. 40,000/- p.a. to Rs. 50,000/-p.a. for all salaried person.

Income from house property
Section 23(4): Previously, If we own more than one house property, we have to pay tax on the rental income or notional rent income for second house property whether we had given it on rent or not. Now, the second house is also exempted from tax as we don’t require to calculate notional rent if we have not given second house property on rent.

Rebate from tax
Section 87A: rebate from income tax is increased from Rs. 2,500/- to Rs. 12,500/- for individual or HUF. This rebate is allowed to the individual who has net total income up to Rs. 5,00,000/-. If the net total income of any individual is more than Rs.5,00,000/- then the benefit of the rebate is not available.

Tax Deducted at Source (TDS)
Section 194A: Limit for TDS deduction is increased from Rs. 10,000/-p.a. to Rs. 40,000/-p.a. for interest income from bank deposits and post office savings. Limit for other interest is remained the same, i.e., Rs.5,000/-p.a.

Section 194I: Limit for TDS deduction is increased from Rs. 1,80,000/-p.a. to Rs. 2,40,000/-p.a. for Rent income from property or plant and machinery took on rent.

Capital Gain
Section 54: If we invest capital gain on sale of house property to another house property it is exempted from tax under section 54. Now, the same benefit can be availed up to new house property maximum up to Rs. 2 Crores. However, this benefit can be claimed only once in a lifetime.

Incentives for farmers
Government has also provided incentive of Rs. 6000/- p.a. (under the scheme of Pradhan Mantri Kisan Samman Nidhi) to all the farmers having agriculture land less than 2 hectares of cultivable land. It will be applicable from September 2018. The amount will be transferred to farmer’s account in three installments. It will cover 12 crore small and marginal farmers of the country.

Pension Scheme for the unorganized sector
The government has introduced a mega pension scheme to provide a monthly pension of Rs. 3000/- for workers in the unorganized sector after the age of 60 years with a contribution of Rs. 100/- p.m.

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Nil Tax Even If Salary Income is Rs. 10 Lakhs

Can we imagine that if a salaried person is getting Rs. 10,00,000/- p.a. still,…

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how to save tax even if i earn 10 lakhs

Can we imagine that if a salaried person is getting Rs. 10,00,000/- p.a. still, he need not to pay tax under the income tax act. The answer is yes after the budget announcement it can happen with smart investment and tax planning.

Let us understand the same with an example

SRParticularsAmt(Rs.)Amt(Rs.)
Income from salary10,00,000
 –Less: Standard Deduction (Under Section 16(ia)), irrespective of the allowances received by the employees of the company)(50,000)
 –Net Income from salary9,50,000
 –Less: Interest on housing loan (Max. allowable deduction under section 24(b) is Rs.2,00,000 for self-occupied house property)(2,00,000)
Gross Total Income7,50,000
Deduction under chapter VI of the Income tax act
 –Under section 80C (Max. deduction allowed is Rs. 1,50,000/-)(for investment in ELSS Mutual fund, PPF, LIP, tuition fees of school or recognized university for full-time course, NSC, KVP, a stamp duty of house, principal repayment of housing loan, sukanya samriddhi yojana, etc.)(1,50,000)
 –Under Section 80CCD (Max. deduction allowed is Rs. 50,000/- for investment in recognized National Pension scheme)(50,000)
 –Under section 80D (Max. Rs. 25,000/- for self, spouse and children and Rs. 25,000/- for parents). It will be Rs. 30,000/- if self and spouse or parents any of them is a senior citizen)(50,000)
 –Total Deduction(2,50,000)
Total Income5,00,000
Tax on total income
 –On First upto Rs. 2,50,000/-Nil
 –On Next upto Rs. 2,50,000/- @ 5%12,500
 –On Next upto Rs. 5,00,000/- @ 20%N.A.
 –Income Above Rs. 10,00,000/- @ 30%N.A.12,500
 –Less: Rebate under section 87A (Max. upto Rs. 12,500/- for a person having total income upto Rs. 5,00,000/-)(12,500)
Net Tax PayableNil

The government has given various benefits under different heads of income as well as under deduction sections of the income tax act. So, even if any person is earning Rs. 10,00,000/- p.a. he need not to pay any income tax to the government.

However, if the total income of the individual is increased even by Rs. 1/- above Rs. 5,00,000/- then benefit of section 87A is not available to individual then in that case the tax amount will be increased by Rs. 12,500/- as the benefit under section 87A is not available to the individual. Moreover, the above-mentioned benefits are available to only Individual and HUF. Partnership firm or company will not be getting such benefits of slab rate or rebate or deduction under chapter VI as mentioned above.

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