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Individuals earning upto Rs 9.5 lakhs can escape tax liability

Updated on: 10 Aug, 2023 12:42 PM

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:

  • Increase in the limit of Standard Deduction from the existing Rs 40,00 to Rs 50,000 in FY 2018-19.
  • The limit of Rebate u/s 87A enhanced from Rs 2,500 to Rs 12,500.
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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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.