Interim Budget 2019 brought an eye to eye smile for the middle and the salaried class when FM Piyush Goyal announced to make income up to Rs. 5 lac tax free. The Income Tax slab has not been changed from Zero to 5 lac, but the centre has proposed a tax rebate under Section 87A for resident individuals, which makes taxable income up to Rs. 5 lac exempted from income tax.

As per the Income Tax Slab FY2018-19, the maximum tax in the Rs.2.5 lac to 5 lac slab, would arrive at Rs.12,500. As per Section 87A, if an individual’s taxable income after claiming all deductions arrives at less than or up to 5 lac, then s/he will be eligible to claim a rebate of Rs.12,500 or the amount of tax payable, whichever is lower. Not many know that until FY 2018-19, Rs 2,500 could be claimed under Section 87A for taxable income up to Rs. 5 lac.

A common query in the salaried class circle these days is that ‘How the Income Tax Slab for FY2019-20 looks like?’ Let’s take a look:

Income Tax Slab for FY2019-20

Up to Rs.2,50,000 – Nil

Rs.2,50,000 – Rs.3,00,000 – 5%

Rs.3,00,000 – Rs.5,00,000 – 5%

Rs.5,00,000 – Rs.10,00,000 – 20%

Greater than Rs.10,00,000 – 30%

Additional Health & Education Cess of 4% applicable

Additional Surcharge of 10% for Taxable Income from 50 lacs to 1 Crore

Additional Surcharge of 15% for Taxable Income above 1 Crore

Rebate up to Rs.12,500 under Section 87A applies for Taxable Income up to Rs.5 lacs.

Standard Deduction of Rs.50,000 is applicable.

The announcement brings cheer for not only those resident individuals whose annual income fall below Rs. 5 lac, but for those too who are above the new threshold. The common man must know that Income Tax is not calculated on your total income, but on the taxable income that is arrived after claiming various exemptions.

Here are few sections under which you can claim tax deductions for up to Rs.2.5 lac of your yearly income and if you have availed a home loan, then your EMIs can share your tax burden by fetching tax exemption on the interest paid in EMIs and principal repayment on your Home Loan.

Know how to reduce your Income Tax liability for FY2019-20?