Income Tax Relaxations from FY 2019-20

Income Tax Relaxations from FY 2019-20

In the earlier article on Retirement and Pension Benefits, we gone through the retirement and pension benefits. The managerial administration deals taxation provisions very strictly as per the updated rules and directions notified by the income tax department from time to time. In order to ensure compliance of rules and directions, a lot of paper work is done by the individuals, companies, and government offices. Before providing any deduction or exemption, necessary documents are required to be kept in custody by the drawing and disbursing officers, principal accounts officers, and individuals claiming for the deductions and exemptions. From financial year 2019-20, first time provisions are made to reduce the paper work by relaxing a few norms with regard to tax deduction at source (TDS). 

Income Tax Relaxations from FY 2019-20

An individual can save a lot of amount by sincerely following the rules of income tax. The tax-saving provisions can minimize the tax liability. Let's have a look upon the exemptions in Income Tax:

The major changes which will directly influence an individual from Financial Year 2019-20 are:

(i) Rebate under section 87A:

From FY 2019-20, the rebate under section 87A extended from Rs. 2500 to Rs. 12500. An individual is eligible to get rebate under section 87A if the taxable income i.e. Gross Total Income minus Deductions 80C to 80U, is less than or equal to Rs. 5 Lacs.

The income tax slabs are not changed and due to increase in rebate the individuals with the taxable income up to Rs. 5 Lacs will have nil tax liability. Let’s understand it:

The income tax slabs are up to Rs. 250000 – Nil, from 250000 to Rs. 500000 – 5%, from 500000 to Rs. 1000000 – 20%, and above Rs. 1000000 – 30%.

In case, the taxable income is Rs. 500000, the tax payable will be nil up to Rs. 250000 and next 250000 @5% i.e. 12500. The rebate will be provided on 12500 thus the tax liability will be 12500 – 12500 = Nil.
During FY 2018-19, the rebate was Rs. 2500 for individuals with taxable income up to Rs. 3.5 Lacs.

In other words, "Individuals having taxable income upto Rs. 5, 00, 000 will get full rebate on Tax Payable Amount". 

(ii) Increase in Standard Deduction under Salaries Head:

From FY 2019-20, the standard deduction increased to Rs. 50000. The standard deduction for the FY 2018-19 was Rs. 40000. This standard deduction is available to the salaried & pensioners because they have income from the salaries head. All individuals with income from Salaries head are eligible to get standard deduction up to Rs. 50000 of the income from salaries, and the remaining will be taxable under the head of salaries.

(iii) No tax on two self occupied houses in House Property Head:

Till 31^st March 2019, the individuals had option to decide only one self occupied house in case they had more than one house. The income from other house properties was required to be taken while computing income from house property. Suppose, an individual has two houses laying vacant. He may reside in one house and the second house which is not giving any rental income, earlier it was required to take notional rent of the house as taxable income and accordingly compute the taxable income. From FY 2019-20, an individual can claim two house properties as self occupied if no rental income is earned from the properties.
The people looking to relocate themselves or facing problems due to work at two locations can easily manage two houses now. 

Under section 54, now two houses can be considered. 

(iv) Tax Deduction at Source on interest on deposits after amount becomes greater than Rs. 40000:

Earlier the banks and financial institutions were directed to deduct tax deduction at source (TDS) if the interest on deposits becomes greater than Rs. 10000. The limit is increased up to Rs. 40000. However, in order to get relaxation from such TDS, the individuals have right to deposit Form 15 G / 15H with the banks and financial institutions in case the interest income increased more than the limit. The Form 15G / 15H is basically a declaration on part of the individual that his or her income is not taxable therefore no tax should be deducted at source by the banks and financial institutions.

It is worth to mention here that from FY 2018-19; the senior citizens (individual with age more than 60) had been made exempt to pay tax on income of interest on deposits if the income is up to Rs. 50000.

Copyright © 2019 Dr. Lalit Kumar. 

Previous Article

Next Article