Income tax rebate of ₹12,500 to those who earn up to ₹5 lakh from April 1 - Hindustan Times
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Income tax rebate of 12,500 to those who earn up to 5 lakh from April 1

New Delhi | ByPress Trust of India
Feb 01, 2019 09:10 PM IST

CBDT Chairman Sushil Chandra said people having taxable income of ₹6.5 lakh per annum too can avail “tax rebate” provided they invest ₹1.5 lakh in specified investments such as PPF, General Provident Fund (GPF) and insurances.

The income tax department will give a “straight rebate” of 12,500 to people having an annual income of 5 lakh from the beginning of next fiscal, thus making their tax liability zero, CBDT Chairman Sushil Chandra said Friday, explaining the proposal made in the Union Budget for 2019-20. For people earning more than 5 lakh annually, the “old” tax rates will continue. However, people having taxable income of 6.5 lakh per annum too can avail “tax rebate” provided they invest 1.5 lakh in specified investments such as PPF, General Provident Fund (GPF) and insurances, he said.

The income tax department will give a “straight rebate” of <span class='webrupee'>₹</span>12,500 to people having an annual income of <span class='webrupee'>₹</span>5 lakh from the beginning of next fiscal (Photo by Arvind Yadav/ Hindustan Times)(Arvind Yadav/HT PHOTO)
The income tax department will give a “straight rebate” of 12,500 to people having an annual income of 5 lakh from the beginning of next fiscal (Photo by Arvind Yadav/ Hindustan Times)(Arvind Yadav/HT PHOTO)

Explaining the nuances of the proposals announced by Finance Minister Piyush Goyal in his interim budget speech, Chandra said, “This (zero income tax) rebate is only for persons whose taxable income is 5 lakh. If the return filed or taxable income is 5 lakh, then their tax liability will be nil because we will be giving a rebate of the total tax which is due on 5 lakh of taxable income.” “As per the present taxation rate, the tax liability up to 5 lakh is 12,500. So, we will give a rebate of 12,500 straight so that everyone who is filing a return up to 5 lakh of net income will absolutely be a tax exempt case. They will get a full rebate,” Chandra told PTI in an interview.

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Even after that, he added, if a person is earning 6.5 lakh per annum, and he or she deposits 1.5 lakh under 80C (section of I-T Act that deals with deductions) in PPF, GPF, insurance, then his taxable income becomes 5 lakh though he is earning 6.5 lakh. “So, for such a person it will be a total rebate of tax liability,” the top official of the income tax department said.

Watch| Budget 2019 tax proposals: Here’s who gains and how

 

The Central Board of Direct Taxes (CBDT) frames policy for the I-T Department.

For those, he said, whose return of income or taxable return is more than 5 lakh, the old slab of tax rates will continue.

“There is no change in that because this is an interim budget and it has been targeted that the small taxpayers, middle-class and lower middle-class taxpayers should have a certainty of their tax liability on April 1. I can tell you that this proposal ( 5 lakh income rebate) will be applicable from the coming financial year of April 1 after it is passed in this budget session of Parliament,” Chandra said.

Also Read| Budget 2019: No tax for 5 lakh income, says FM. Others will need to wait for next budget

The CBDT boss said Friday’s budget had something for the salaried class of taxpayers too.

“The salaried employees will get an additional benefit of 10,000 under standard deduction. This has been hiked from 40,000 to 50,000 in the budget,” he said.

About three crore taxpayers will be benefitted from this enhanced standard deduction and revenue forgone for this will be about 4,700 crore, he said. Chandra added that the proposal of giving rebate in income tax to people earning up to 5 lakh will benefit another three crore people and the revue forgone would be 18,500 crore. “Both of these rebates will be the income in the hands of the taxpayers and they will be able to used the money for productive purposes. As this was an interim budget, we had a very limited space and the target sectors were the middle-class and lower middle class,” he said.

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