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 |