Impact of proposed tax proposals in the budget for the salaried class or to the pensioners under 60 years of age.
Budget 2019 Income Tax Slab Rates Changes Expectations: Individuals with a gross income of Rs 6.5 lakh will have to pay no tax if they make an investment. Goyal also said standard deduction would be raised from Rs 40,000 to Rs 50,000.
As per the slabs announced in the last Budget, for individuals below 60 years, income up to Rs 2.5 lakh was exempt from tax. Five per cent tax was levied on income between Rs 250,001 to Rs 5 lakh; 20 per cent tax on income between Rs 500,001 and Rs 10 lakh; and 30 per cent tax on income above Rs 10 lakh.
For senior citizens (aged 60 years or above but less than 80 years), income up to Rs 3 lakh was exempt from tax. Income from Rs 300,001 to Rs 5 lakh was taxed at 5 per cent, from Rs 500,001 to Rs 10 lakh at 20 per cent and above Rs 10 lakh at 30 per cent.
The three major components for computing income tax are gross taxable income, HRA exemption, and transport allowance.
HRA, for instance, is calculated on the basis of your basic salary. But it is also dependant on other factors, such as the city you reside in. People staying in a metropolitan or tier-1 city, their HRA will come to 50 per cent of their salary, while it’s 40 per cent of the salary in all other cities.
Transport allowance, which is a component of your salary, is also tax exempted. Note that the maximum annual tax exemption limit stands at Rs 19,200. If you exceed the limit, you are liable to pay tax.