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The Interim Budget 2019, since it was announced on 1st Feb is constantly being backfired with questions. In response to the latest one Finance Minister Piyush Goyal said, Now individuals earning upto Rs 9.5 can escape tax liability by taking the advantage of saving schemes.
You might have already read and calculated tax saving on income upto Rs 5,00,000, Rs 6,50,000 or Rs 7,00,000. But surprised to come across this new figure of Rs 9,50,000? Yes, this is possible with investing in some of the popular tax saving avenues.
Let us understand this with the help of a case study.
Mr. Win having an annual salary of Rs 9,50,000 makes following tax saving investments:
| Rs 1,50,000 | Under Section 80C in different options like LIC, PPF, Home Loan Principal paid etc |
| Rs 2,00,000 | Amounting to the interest paid on home loan during the year |
| Rs 50,000 | For Medical Insurance Premiums Paid u/s 80D |
He wants to know his tax liability for the Financial Year 2019-20 (AY 2020-2021).
Let us calculate the tax liability of Mr. Win keeping in consideration the following pronouncements made in Interim Budget 2019:
| Particulars | Amount (Rs) |
|---|---|
| Gross Total income from Salary | 9,50,000 |
| Less: Loss From House Property | 2,00,000 |
| Less: Standard Deduction | 50,000 |
| Less: Deduction u/s 80C | 1,50,000 |
| Less: Deduction u/s 80D | 50,000 |
| Taxable Salary | 5,00,000 |
| Less: Basic Exemption Limit | 2,50,000 |
| Tax on remaining Rs 2,50,000 @ 5% | 12,500 |
| Less: Rebate u/s 87A | 12,500 |
| Net Tax Payable | NIL |
*Above income and deduction figures have been presumed by the writer and may differ from case to case.
You can escape tax even on higher income limits. This can be done by investing in some other options like NPS etc or just in case you have taken any education loan during the year or made any donations.
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