Basic exemption limit has not been increased to Rs 5 Lakh 

 

Instead  of giving  straight  exemption  on  income  upto Rs.5,00,000/- finance minster  twisted the situation by giving Rebate under section 87A Thus if income is more than 5 lakh , assessee cannot claim rebate under section  87A  and  assessee will  need to pay tax on income above Rs. 2,50,000 /- Explained with below example .

 

Particulars	Situation I	Situation II
Income	5,00,000	5,00,100
Computation of Tax
0.250000 @ 0%	0	0
25000 1 – 500000 @5%	12500	12500
50000 1 – 500100 @ 20%	0	20
Rebate  u/ s  87A	12500	0
Net tax	0	12520
Add :Cess @ 4%	0	501
Not Tax Liability	0	13021