Union Finance Minister, Mr. Piyush Goyal in his Interim Budget 2019 has proposed that individuals with taxable income up to Rs 5 lakh will get full tax rebate under section 87A of the Income Tax Act. This announcement has received a heads up from the beneficiaries with earnings in rebate slab; the offering has not caught up much euphoria in the community having modest earnings. But, there is a lot more for higher earning people than what meets the eye!
This may sound astonishing, but even if you are earning 15 lakhs or more, you can charm your way to PAYING ZERO TAX.
Amazed? This is possible with right understanding of the Income Tax system. You just need to evolve wisdom and work with your organisation to redefine the salary structure. By investing little time in planning, you will be led to the path to secure future. Without further ado, let’s try to understand how this is possible.
CTC : 15.15 Lakhs (Basic 10 Lakhs)
|Pay Head||Annual Pay||Annual Exemption||Taxable Income|
|Employer’s Contribution To NPS||1,00,000||1,00,000||0|
|Taxable income under salary||10,00,000|
|Interest on Home loan||-2,00,000|
|Section 80C exemptions||-1,50,000|
|Self contribution to NPS 80CCD (1B)||-50,000|
|Medical Insurance Premium||-50,000|
|Net Taxable Income||5,00,000|
|Income Tax Payable||12,500|
|Rebate under section 87a||-12,500|
|Net Tax Payable||0|
We have observed a sense of negative sentiment about tax slabs not being revised. Some self-proclaimed Tax Gurus call this as a big miss on the part of government, but we relate it to a lot of thorough understanding on the part of the economists behind it. The idea is to not get lured by small time enchantments and plan an economy where individuals are debt- free, self-reliant in the later stages of life. By not expanding the tax slabs and increasing the taxable income to 5 Lacs to relinquish the tax rebate benefits, the government is encouraging the individuals to invest across multiple streams, having a self-owned house and at the same time passing the benefits to those staying in the rented property.
Your dispensable income today may be tad shallowed in leveraging all the tax saving instruments. But the best part is, you don’t just end up paying zero tax, you are also working your way to a better future ahead. Infact, with little thought and execution, a couple earning 30-35 Lakhs can also be paying zero tax and yet enjoying all the services and benefits the country has to offer.
I am delighted with the interim budget 2019, are you?