As per the popular demands in the election year, the government in the Union Budget 2019 has declared complete rebate in income tax on taxable income up to Rs 5 lakh.
The Budget document also explained the rebate as, “Clause 8 of the Bill seeks to amend section 87A of the Income Tax Act to provide relief to the individual taxpayers by increasing the maximum amount of tax rebate to Rs 12,500 from existing Rs 2,500. The tax rebate shall now be admissible to taxpayers having total income up to Rs 5 lakh, instead of existing Rs 3.5 lakh.”
So, the Finance Bill clearly states that the benefit of the tax rebate will be for people having taxable income up to Rs 5 lakh only.
Finance Minister Piyush Goyal also announced an increase in standard deduction for salaried taxpayers from the current level of Rs 40,000 to Rs 50,000.
Apart from the tax rebate and hike in standard deduction from Rs 40,000 to Rs 50,000, there is no change in tax slabs or deduction limits. So, tax slabs will start at Rs 2.5 lakh and the Section 80C deduction limit will be Rs 1.5 lakh.
Similarly, the deduction for interest paid on housing loan for self-occupied properties will remain unchanged at Rs 2 lakh.
There were expectations that deduction limits under Section 80C of Income Tax Act and also the deduction for interest on the home loan may be hiked.
However, the Finance Minister said that the major decisions like changed in slab rates may only be taken in a full budget.
Explaining the rebate in a press conference after presenting the Budget, Finance Minister Goyal said, “Tax slabs are not raised. It is only a rebate that will benefit people having taxable income up to Rs 5 lakh.”