Individuals earning Rs 8-9 lakh annually can escape taxes - here is how (Representational Image)
Individuals earning Rs 8-9 lakh annually would not have to pay any income tax if they make proper investments in tax saving instruments like provident fund, life insurance, pension scheme and home loan, Revenue Secretary Ajay Bhushan Pandey said on Saturday.
Finance Minister Piyush Goyal in the Interim Budget for 2019-20 proposed to give a full tax rebate to individuals having taxable annual income up to Rs 5 lakh with a view to benefitting around 3 crore middle class taxpayers at an estimated revenue sacrifice of Rs 18,500 crore.
"We have given a complete rebate of Income Tax so that people having taxable income of Rs 5 lakh do not have to pay any tax. Now people having even higher gross income if they make investment in 80C or if they pay interest on education or home loan, or if they invest in pension scheme, Mediclaim, critical illness then people having much higher income in the range of Rs 8-9 lakh also can get their taxable income reduced to below Rs 5 lakh and get advantage of rebate and not pay any tax," Pandey told PTI in an interview.
The move would provide relief to middle-class taxpayers comprising self-employed, small businesses, small traders, salary earners, pensioners and senior citizens. Under Section 80C of I-T Act, a tax rebate is available for investments made in specified instruments like PPF, life insurance, tuition fee, five-year term deposit in banks and Post Office, up to Rs 1.5 lakh in a year.
Individuals can also take tax savings advantage of interest on a home loan up to Rs 2 lakh, Rs 50,000 in National Pension scheme, Rs 75,000 on medical insurance premium.
Besides, the government has also raised the standard deduction from Rs 40,000 to Rs 50,000 to provide additional benefit to salary earners. The standard deduction would be available for the salaried class, irrespective of income.