Basic exemption limit has not been increased to Rs 5 Lakh

Basic exemption limit has not been increased to Rs 5 Lakh 

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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

 

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