Actual benefit to flow to Individuals earning beyond Rs. 5 Lakh also
Individuals earning even between ₹8 to 10 lakh annually would also be benefited by Interim Budget 2019.
They may not have to pay any income tax if they make proper investments in tax saving instruments like provident fund, life insurance, pension scheme, home loan, etc.
Finance Minister CA Piyush Goyal in the Interim Budget for 2019-20 proposed to give full tax rebate to individuals having taxable annual total income up to ₹5 lakh.
It is expected to benefit around 3 crore middle class taxpayers at an estimated sacrifice to treasury of around ₹18,500 crore.
“We have given complete rebate of Income Tax so that people having taxable income of ₹5 lakh do not have to pay any tax.” Said Piyush Total.
Even Individuals having even higher gross income, if they make investment in 80C or if they pay interest on education or home loan, or if they invest in NPS, mediclaim, critical illness then such individuals having even higher income up to Rs. 10 lakh also can get their taxable income reduced to below ₹5 lakh and get advantage of rebate and Will end up with zero tax liability.
The move would provide relief to middle class taxpayers comprising self employed, small businesses, small traders, salary earners, pensioners and senior citizens.
Under Section 80C of I-T Act, deduction is available for investments made in specified instruments like PPF, life insurance, tuition fee, five-year term deposit in banks and Post Office, up to ₹1.5 lakh in a year.
Individuals can also take tax savings advantage of interest on home loan up to ₹2 lakh, ₹50,000 in National Pension scheme, ₹ 50,000 on medium.
Additionally, the government has also raised the standard deduction from ₹40,000 to ₹50,000 to provide additional benefit to salary earners in all range of salary. The standard deduction would be available for the salaried class, irrespective of income and position.