The budget presented by interim Finance Minister Piyush Goyal brings a tactical step of introducing rebate for people with income up to Rs 5 lakh.
This means that if a person’s income crosses this limit, he will come under the previous exemption limit of Rs 2.5 lakh plus standard deductions.
At the same time, the deduction allows an individual with income up to Rs 6.5 lakh not to pay any tax. Here, the tax payer is exempted up to Rs 5 lakh plus he can claim the permissible deductions up to Rs 1.5 lakh. Similarly, the standard deduction has been enhanced to Rs 50000.
“Individual taxpayers having taxable annual income up to Rs 5 lakhs will get full tax rebate and therefore will not be required to pay any income tax. As a result, even persons having gross income up to Rs 6.50 lakhs may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc. In fact, with additional deductions such as interest on home loan up to Rs 2 lakh, interest on education loans, National Pension Scheme contributions, medical insurance, medical expenditure on senior citizens etc, persons having even higher income will not have to pay any tax.
The tax slab for as per the new budget is as follows for an individual below 60 years of age.
|Upto Rs 250000*||Nil|
|Rs 250001 to Rs 5 lakh||5 per cent|
|Rs 500001 to Rs 10 lakh||20 per cent|
|Above Rs 10 lakh||30 per cent|
*Rebate of Rs 5 lakh is applicable.
The Finance Bill presented along with the budget also gives the same tax slab.
According to the FM, the rebate will cause a revenue loss of Rs 18500 crores. Though the rebate is a relief for the tax payers of the lowest group, it will not be like that for tax authorities.