Budget 2019: No income tax up to Rs 5 lakh is good news, but how to claim the benefit of tax rebate – The Financial Express

Giving relief to people in the lower middle income group, Finance Minister Piyush Goyal, while presenting the Budget 2019, announced total tax rebate to assessees having taxable income up to Rs 5 lakh, while the income tax slabs were left untouched. So, the benefit may be availed by only those people whose taxable income doesn’t exceed the threshold limit of Rs 5 lakh, and for other taxpayers having taxable income over the threshold limit, there will be no benefit of the rebate.

According to the Finance Bill, “Clause 8 of the Bill seeks to amend section 87A of the Income Tax Act to provide relief to the individual taxpayers by increasing the maximum amount of tax rebate to Rs 12,500 from the existing Rs 2,500. The tax rebate shall now be admissible to taxpayers having total income up to Rs 5 lakh, instead of the existing Rs 3.5 lakh.”

Clearing any confusion on whether the tax slab has been increased to Rs 5 lakh or not, the Finance Minister, in a press conference, said, “Tax slabs are not raised. It is only a rebate that will benefit people having taxable income up to Rs 5 lakh.”

So, the tax slabs remain as it is. That is, nil tax up to Rs 2.5 lakh; 5 per cent tax from Rs 2.5 lakh to Rs 5 lakh; 20 per cent tax on income between Rs 5 lakh and Rs 10 lakh; and 30 per cent tax on income above Rs 10 lakh.

So, people having taxable income between Rs 2.5 lakh and Rs 5 lakh have to file ITR as they have taxable income and the rebate will be given only on the tax payable.

“People having taxable income up to Rs 5 lakh only will get the tax rebate. If the taxable income exceeds the limit by even a rupee, the taxpayer has to pay tax on income of Rs 2.5 lakh onwards,” said Chartered Accountant Ravi Kumar Singh.

Pointing to an important tax compliance, Singh also said, “A taxpayer may get the benefit of tax rebate only after filing his or her ITR (income tax return), otherwise the Income Tax Department may send a tax notice even if the annual taxable income is below Rs 5 lakh, but above Rs 2.5 lakh.”

So, even if you have taxable income of between Rs 2.5 lakh and Rs 5 lakh, you have to file an ITR and claim the benefit of rebate on the tax payable, otherwise you may get a notice for not filing the return.

via Budget 2019: No income tax up to Rs 5 lakh is good news, but how to claim the benefit of tax rebate – The Financial Express

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