New Delhi: Amid expectation of tax sops for middle class, Finance Minister Piyush Goyal on Friday announced hike in income tax exemption limit from the present Rs 2.5 lakh to Rs 5 lakh per annum. Also Read - BCCI Questions Shashank Manohar's Position in Tax Battle With ICC
“Individual taxpayers having taxable annual income up to Rs 5 lakh will get full tax rebate and therefore will not be required to pay any income tax,” Goyal said, while presenting the budget in the Lok Sabha. Also Read - Interim Budget 2019: Tax Cut For Middle Class, Direct Cash Transfer For Farmers, Mega Pension Scheme Announced
This means that anyone with net taxable income up to Rs 5 lakh will not be required to pay any taxes. However, anyone with net taxable income above Rs 5 lakh will not be able to avail this tax benefit and only get standard deduction benefit. Also Read - Modi Govt Likely to Present Full-fledged Budget on Feb 1; Major Announcements on Tax Exemption, Sops For Farmers Expected
Also, people with gross income up to 6.5 lakh rupees will not need to pay any tax if they make investments in provident funds and prescribed equities, said Goyal, presenting the Interim Budget 2019 in the Lok Sabha.
New Income Tax Slabs — Tax Rate
Income up to Rs 5,00,000* — No tax
Income from Rs 5,00,000 – 10,00,000 – 20%
Income more than Rs 10,00,000 – 30%
Goyal further announced an increase in standard tax deduction for salaried employees from the current Rs 40,000 to Rs 50,000.
Also, the TDS threshold on interest on bank and post office deposits has been raised from 10,000 to 40,000 rupees. The TDS threshold on rental income has been raised from 1.8 lakh to 2.4 lakh rupees.
The government also extended benefits under Sec 80(i)BA for one more year, for all housing projects approved till end of 2019-2020.
In the 2017 Budget, Finance Minister Arun Jaitley had proposed to reduce existing rate of taxation of those with income between Rs 2.5 lakh to Rs 5 lakh from 10 percent to 5 percent.