A person who earns up to Rs 6.5 lakh per annum can effectively bring down the next taxable income to Rs 5 lakh with proper investments and escape paying any tax, according to experts.
There were other proposals on TDS on rent and interest as also reiteration of the digitisation of the tax assessment process to ensure seamless and smooth communication with the taxpayers.
Goyal also proposed that benefit of rollover of capital tax gains be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains of up to Rs 2 crore.
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The income tax department will give a "straight rebate" of Rs 12,500 to people having an annual income of Rs 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. So, only those whose total income does not exceed Rs 5 lakh will be eligible for the benefit. However, resident taxpayers with income up to ₹5,00,000 will get a full tax rebate. The threshold for tax deduction at source on rent has gone up to Rs 2.4 lakh from current Rs 1.8 lakh.
This could benefit as many as 30 million taxpayers, the minister said, adding that those earning more will be taxed at the prevailing rates.
The interim budget leaves unchanged the cess on income tax that Finance Minister Arun Jaitley raised to 4 per cent from 3 per cent in the FY2019 budget. The standard deduction limit has also been increased to Rs 50,000. This was introduced past year after being abolished in the Finance Act 2005.