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The Union has embodied changes in the budget for FY 2019-2020 that impact the income tax calculations w.e.f April 2019.

The following budget Changes for FY April 2019-2020 are auto-enabled and implemented in greytHR.

Section 87A

The tax rebate limit under Section 87A has been increased from Rs. 3.5 lakhs to Rs. 5 lakhs for the taxpayers. The maximum limit of the tax rebate has increased from Rs. 2,500 to Rs. 12,500.

falseFor Example

Scenario 1: The gross taxable income of a taxpayer is Rs. 7 lakhs and the entire deduction of Rs. 1.5 lakh available under section 80C has also been claimed. Given that the standard deduction has been hiked by Rs. 10,000 – it brings down the net taxable income to Rs. 5 lakh. Hence, the IT levy is Rs. 12,500 and a full rebate of this amount will be available. Thus, there will be no IT payable, as opposed to an IT outgo of Rs. 15,000 approximately under the current IT laws.

Scenario 2: The gross taxable income of the taxpayer is Rs 9.5 lakh. The entire deduction of Rs 1.5 lakh available under section 80C has been claimed. A hike of Rs 10,000 in standard deduction reduces the net taxable income to Rs 7.5 lakh. Here, as the taxpayer has a net taxable income of more than Rs 7.5 lakh, no rebate is available from the I-T levy of Rs 62,500. So, the taxpayer saves just Rs 2,000 odd owing to the enhanced standard deduction of Rs 50,000.

Others

The existing standard deductions for salaried employees are increased from Rs. 40,000 to Rs. 50,000.

Below are some examples of the new budget changes, for your understanding:

If your Total salary is Rs 7,00,000 per annum and you have saved the full amount up to the limit i.e., Rs. 1,50,000 under Section 80C. Then, below is the break up of the Income Tax.


Rs
Gross salary7,00,000
Standard deduction50,000
Savings u/s – 80C1,50,000
Tax on total Income12500
Rebate12500
TaxNil

If your Total salary is Rs 7,00,010 per annum and you have saved the full amount up to the limit of Rs. 1,50,000 under Section 80C. Then, below is the break up of the Income Tax.


Rs
Gross salary7,00,010
Standard deduction50,000
Savings u/s – 80C1,50,000
Tax on total Income12,502
Cess@4%500
RebateNil
Tax13,002

If your total income increases even by Rs. 10, you will not get the rebate and your tax on total Income will be Rs. 13,002.

Copy of the Finance Bill

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Section 80EEA and 80EEBSection 80EEA and 80EEB

These are the two sections inserted newly. 80EEA section is inserted aiming with the objective of Housing for all whereas 80EEB is inserted aiming at the promotion of electric mobility in the country.

As per the section 80EEA, an individual can claim for additional tax exemption of Rs 1,50,000 on loan taken for the purchase of a house.
An individual qualifies for the benefits u/s 80EEA if he or she satisfies the following conditions:

  • The house loan is taken from approved financial institutions between April 1, 2019 to March 31, 2020
  • The stamp value of house is less than Rs 45 Lakhs
  • The buyer should not have any other house in his name at the time of loan sanction

A new section 80EEB has been introduced allowing a deduction for interest paid on loan taken for the purchase of electric vehicles.
An individual qualifies for the benefits u/s 80EEB if he or she satisfies the following conditions:

  • The loan must be taken from a financial institution or a non-banking financial company for buying an electric vehicle
  • The loan must be sanctioned anytime during the period starting from 1 April 2019 till 31 March 2020
  • The buyer should not own any other electric vehicle on the date of loan sanction

Revised surcharge ratesRevised surcharge rates

The government of India has revised surcharge rates of individual taxpayers. Given below are the latest income tax slabs with the latest surcharge rates applicable for the financial year 2018-2019:

Min LimitMax LimitTax Rate Surcharge Rate
025000000
25000150000050
5000011000000200
10000015000000300
5000001100000003010
10000001200000003015
20000000500000003025
50000001999999999993037
Copy of the Finance Bill

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