Changes in Income Tax Rebate

Income Tax Rebate increased from 2500 to 12500 if Income between 250000-500000

Earlier

Income Tax Rebate was earlier available of max 2500 if Income between 250000-350000

Now

Income Tax Rebate is now available of max 12500 if Income between 250000-500000

OLD SLAB RATE NEW SLAB RATE
Income Tax Income Tax
upto 250000 0% upto 250000 0%
250001 to 500000 5% 250001 to 500000 5%
500001 to 1000000 20% 500001 to 1000000 20%
Above 1000000 30% Above 1000000 30%
Rebate   Rebate  
If income between 250000-350000 2500 If income between 250000-500000 12500
Education Cess  4% on tax Education and Health Cess  4% on tax

 

** No changes in Income tax slab rate for F.Y 2019 -20 in this budget. Only rebate has been increased from 2500 to 12500 u/s 87A, if net total income is less then or up to Rs 500000

 

Example

Income Tax Rebate was earlier available of max 2500 if Income between 250000-350000

OLD SLAB RATE
Particulars Case 1 Case 2 Case 3
Income 350000 500000 600000
Tax 5000 12500 32500
Rebate 2500 0 0
Net Tax 2500 12500 32500
Education and Health Cess 4% 100 500 1300
Tax + Cess 2600 13000 33800

 

Now

Income Tax Rebate is now available of max 12500 if Income between 250000-500000

NEW SLAB RATE
Particulars Case 1 Case 2 Case 3
Income 350000 500000 600000
Tax 5000 12500 32500
Rebate 5000 12500 0
Net Tax 0 0 32500
Education and Health Cess 4% 0 0 1300
Tax + Cess 0 0 33800

 

Standard Deduction Now 50000 for Salaried Employees (Earlier it was 40000)

Standard Deduction has been increased from 40,000 to 50,000 now

EARLIER NOW
Monthly Salary 30000 Monthly Salary 30000
Annual Salary 360000 Annual Salary 360000
Less Standard Deduction 40000 Less Standard Deduction 50000
Income From Salary 320000 Income From Salary 310000

 

EARLIER

Standard Deduction of 40000 was available

EARLIER
Particular Case 1 Case 2 Case 3 Case 4 Case 5 Case 6
Monthly Salary 10000 20000 30000 45833.33 50000 1000000
Annual Salary 120000 240000 360000 550000 600000 12000000
Less: Standard Deduction 40000 40000 40000 40000 40000 40000
Net Total Income 80000 200000 320000 510000 560000 11960000
Tax 0 0 3500 14500 24500 3400500
Rebate 0 0 2500 0 0 0
Net Tax 0 0 1000 14500 24500 3400500
Cess 4% 0 0 40 580 980 136020
Tax+Cess 0 0 1040 15080 25480 3536520

 

NOW
Particular Case 1 Case 2 Case 3 Case 4 Case 5 Case 6
Monthly Salary 10000 20000 30000 45833.33 50000 1000000
Annual Salary 120000 240000 360000 550000 600000 12000000
Less: Statndard Deduction 50000 50000 50000 50000 50000 50000
Net Total Income 70000 190000 310000 500000 550000 11950000
Tax 0 0 3000 12500 22500 3397500
Rebate 0 0 3000 12500 0 0
Net Tax 0 0 0 0 22500 3397500
Cess 4% 0 0 0 0 900 135900
Tax+Cess 0 0 0 0 23400 3533400

 

Particular Case 1 Case 2 Case 3 Case 4 Case 5 Case 6
Old Tax 0 0 1040 15080 25480 3536520
New Tax 0 0 0 0 23400 3533400
Savings 0 0 1040 15080 2080 3120

 

 

No Tax for Salaried Tax Payers Claiming 80C If Income Up to 700000

Salaried
Particular Amount
Annual Salary 700000
Less:  Standard Deduction 50000
Income From Salary 650000
Less: Deduction  
80 C  150000
Net Total Income 500000
Tax 12500
Rebate 12500
Net Tax 0
Cess 4% 0
Tax + Cess 0

 

(For Businessman, Limit Is 650000)

Business
Particular Amount
Annual Income 650000
Less:  Standard Deduction 0 (**No Standard deduction allow for Business.)
Income From Salary 650000
Less: Deduction  
80 C 150000
Net Total Income 500000
Tax 12500
Rebate 12500
Net Tax 0
Cess 4% 0
Tax + Cess 0

 

Change in TDS Cutoff

  • Section 194I Limit increased from 180000 to 240000
  • Section 194A Limit increased from 10000 to 40000

Section 194A TDS limit increased

Earlier

If Interest is upto 10000,No TDS.

Now

if Interest on FD is upto 40000,No TDS

(However for Interest on FD is upto 50000,then No TDS

 

TDS on Interest on FD/RD (Section 194A)

OLD NEW
Particulars RATE Particulars RATE
Senior Citizens   Senior Citizens  
Interest income more than 50000 10% Interest income more than 50000 10%
       
Normal Citizens (Less than 60)   Normal Citizens (Less than 60)  
Interest income more than 10000 10% Interest income more than 40000 10%

 

Section 194I TDS limit increased for Rent (Land and Building)

 

OLD NEW
Particulars RATE Particulars RATE
Cut off 180000 p.a Cut off 240000 p.a
Rate off TDS 10% Rate off TDS 10%

 

Important section TDS Chart.jpg

 

Income From House Property Will be 0 for Two (Earlier it was One) Self Occupied property

 

EARLIER

Suppose I Have 2 Houses Which Are Self-Occupied Gross Annual Value Of Only One House Can Be Nil For Second House ,We Will Calculate Income From House Property Taking Market Rent

 

Now

Suppose I Have 2 Houses Which Are Self-Occupied Gross Annual Value of both will Be Nil 


Example 1

Suppose i have 2 houses whose market rent is 10000 and 20000 pm

Both houses are self-occupied(it is not given on rent, I am staying in it)

To Claim Section 54 Deduction, Earlier we used to claim

Earlier
Particular House 1 House 2
Market Rent 10000 20000
Annual Rent 120000 240000
     
Gross Annual Value 120000 0
Less Standard Deduction 30% 36000 0
Less Municipal Taxes 0 0
Net Annual Value 36000 0
Less Int On Loan 0 0
Income From House Property 36000 0

 

Now
Particular House 1 House 2
Market Rent 10000 20000
Annual Rent 120000 240000
Gross Annual Value 0 0
Less Standard Deduction 30% 0 0
Less Municipal Taxes 0 0
Net Annual Value 0 0
Less Int On Loan 0 0
Income From House Property 0 0

 

Section 54 Exemption can be used for Purchase of 2 House Property

(Earlier it was 1 house Properties)

Section 54 exemption now available on the second house property, provided the capital gains is less than or equal to Rs. 2 crores – to be availed only once in a lifetime.

 

Example 1

  Amount
Suppose I Sell A Property For 40 Lacs 40 Lacs
Its Cost(After Indexation) Is  30 Lacs
Long Term Capital Gain 10 Lacs

This 10 Lacs I Have To Invest In Purchasing Property

If I Purchase This Property For 8 Lacs,I Used To Get Deduction Under Section 54 Of 8 Lacs

 

  Amount
Suppose I Sell A Property For 40 Lacs 40 Lacs
Its Cost(After Indexation) Is  30 Lacs
Long Term Capital Gain 10 Lacs
Less Section 54 Deduction 8 Lacs
Net Income From Capital Gain 2 Lacs

If I Purchased 2 Properties Of 6 Lacs And 2 Lacs,I Will Deduction For Only One Property

I will take deduction for property having higher value

  Amount
Suppose I Sell A Property For  40 Lacs
Its Cost(After Indexation) Is  30 Lacs
Long Term Capital Gain 10 Lacs
Less Section 54 Deduction 6 Lacs
Net Income From Capital Gain 4 Lacs

But From F.Y 2019-20 Onward,I Can Get Deduction For Both House Property Purchases Of 6 Lacs And 2 Lacs

 

Case 4 Amount
Suppose I Sell A Property For  40 Lacs
Its Cost(After Indexation) Is  30 Lacs
Long Term Capital Gain 10 Lacs
Less Section 54 Deduction (6 lac + 2 lac) 8 Lacs
Net Income From Capital Gain 2 Lacs

Note

This Is Applicable Only If Amount Of Capital Gain Is Upto 2 Crore Rupees

Example 2

  Amount
Suppose I Sell A Property For  700 Lacs
Its Cost(After Indexation) Is  400 Lacs
Long Term Capital Gain 300 Lacs

I Purchase 2 Properties For 220 And 50 Lacs

 

Since capital gain is more than 200 lac, i take deduction for only one property

I Take Deduction To Either 220 Or 50 Lac

We Can Take Deduction Under Sec 54 For The Amount 220 Lac .

 

  Amount
Suppose I Sell A Property For  700 Lacs
Its Cost(After Indexation) Is  400 Lacs
Long Term Capital Gain 300 Lacs
Less Deduction 220 Lacs
Net Income From Capital Gain 80 Lacs

 

Download in PDF

  1. Tax Practical
  2. Budget Amendments - Changes in 2019

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 9 years. He also provides Accounts Tax GST Training in Delhi and Pune.