With the start of the new financial year 2019-20 from this month, it is time to start your financial planning for saving taxes. As announced by the then finance minister Piyush Goyal in his budget, the tax slab remains the same for the new year. Your tax outgo calculation might however change as there has been some changes in rebates and standard deduction.
Individuals below the age of 60 will continue to enjoy tax-free income of up to ₹2.5 lakh, and for those earning between ₹2.5 lakh to ₹5 lakh will have to pay a tax of 5%, for income between₹5 lakh and ₹10 lakh, the tax outgo will be of 20% while any income above ₹10 lakh attracts an income tax of 30%.
However, there is good news for those earning up to ₹5 lakh. Under Section 87A of the Income Tax Act, such individuals will get a tax rebate of up to ₹12,500. This will effectively bring down the tax outgo to nil.
Senior citizens will not have to pay any tax for income up to ₹3 lakh and for super senior citizens (above 80 years), the exemption is up to ₹5 lakh.
For salaried taxpayers, standard deduction has been raised from the current ₹40,000 to ₹50,000. This will provide an additional tax benefit of ₹4,700 crore to more than 3 crore salary earners and pensioners.
A health and education cess of 4% will be added to the total tax outgo besides a surcharge if your income crosses ₹50 lakh.
Income tax rates for individuals below 60 years:
Income tax rates for senior citizens: