What are the Budget Changes April 2019-2020?

Created by Product Content Team, Modified on Wed, 13 Mar at 5:23 PM by Product Content Team

The Union has embodied changes in the budget for FY 2019-2020 that impact the income tax calculations w.e.f April 2019.

After enabling the budget updates, the following budget Changes for FY April 2019-2020 are applied.

Section 87A

The tax rebate limit under Section 87A has been increased from Rs. 3.5 lakhs to Rs. 5 lakhs for the taxpayers. The maximum limit of the tax rebate has increased from Rs. 2,500 to Rs. 12,500.

For Example

Scenario 1: The gross taxable income of a taxpayer is Rs. 7 lakhs and the entire deduction of Rs. 1.5 lakh available under section 80C has also been claimed. Given that the standard deduction has been hiked by Rs. 10,000 – it brings down the net taxable income to Rs. 5 lakh. Hence, the IT levy is Rs. 12,500 and a full rebate of this amount will be available. Thus, there will be no IT payable, as opposed to an IT outgo of Rs. 15,000 approximately under the current IT laws.

Scenario 2: The gross taxable income of the taxpayer is Rs 9.5 lakh. The entire deduction of Rs 1.5 lakh available under section 80C has been claimed. A hike of Rs 10,000 in standard deduction reduces the net taxable income to Rs 7.5 lakh. Here, as the taxpayer has a net taxable income of more than Rs 7.5 lakh, no rebate is available from the I-T levy of Rs 62,500. So, the taxpayer saves just Rs 2,000 odd owing to the enhanced standard deduction of Rs 50,000.

Others

The existing standard deductions for salaried employees are increased from Rs. 40,000 to Rs. 50,000.

Below are some examples of the new budget changes, for your understanding:

If your Total salary is Rs 7,00,000 per annum and you have saved the full amount up to the limit i.e., Rs. 1,50,000 under Section 80C. Then, below is the break up of the Income Tax.

	Rs
Gross salary	7,00,000
Standard deduction	50,000
Savings u/s – 80C	1,50,000
Tax on total Income	12500
Rebate	12500
Tax	Nil

If your Total salary is Rs 7,00,010 per annum and you have saved the full amount up to the limit of Rs. 1,50,000 under Section 80C. Then, below is the break up of the Income Tax.

	Rs
Gross salary	7,00,010
Standard deduction	50,000
Savings u/s – 80C	1,50,000
Tax on total Income	12,502
Cess@4%	500
Rebate	Nil
Tax	13,002

If your total income increases even by Rs. 10, you will not get the rebate and your tax on total Income will be Rs. 13,002.

What are the Budget Changes April 2019-2020?

The Union has embodied changes in the budget for FY 2019-2020 that impact the income tax calculations w.e.f April 2019.

Section 87A

Others

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