The budget 2019 has some vital proposals that can keep some cash in the pocket of middle class tax payers. Following the proposals, a salaried individual with a gross total income even upto Rs 10 Lakh per annum can now end up paying zero taxes. Thanks to the various tax saving schemes and deductions, which enables a person to reduce his taxable income to Rs 5 lakhs or below and thereby resulting in zero tax for financial year 2019-20. Such a person would be saving tax of Rs. 15,080 compared to tax payable in current financial year 2018-19.
Lets illustrate how it happens. Say your gross total income for the FY 2019-20 is Rs 10.05 lakh. First you can claim standard deduction of Rs 50,000 in FY 2019-20 against Rs. 40,000 in FY 2018-19. Then you can
invest Rs 1.50 Lakh under section 80C in PPF, LIC or use tuition fee paid for children to claim deduction under the same section. This will now reduce your gross total income to Rs. 8.05 Lakh. Further invest Rs 50,000 under section 80CCD (1B) in the National Pension Scheme, pay medical insurance premium under section 80D for self at Rs. 25,000 and for senior citizen parents at Rs. 30,000. Now your total income stands at Rs. 7 lakh. If you have a housing loan and the interest aggregates upto Rs. 2 Lakh, the same can be fully claimed as deduction under section 24(b), which results in your total salary being reduced to Rs. 5 lakhs, which is effectively tax exempt.
Even if there is an interest income upto Rs. 10,000, it can also be fully deducted under section 80TTA and there wont be tax liability. So a person earning salary income even upto Rs 10 lakh can stay tax free after the current budget proposals which will be effective for FY 2019-20.
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