Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals less than 60 years
Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals betwen 60 years and 80 years
|Up to Rs. 2,50,000
|Rs. 2,50,000 to Rs. 5,00,000
|Rs. 5,00,000 to Rs. 10,00,000
|Above Rs. 10,00,000
Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals above 80 years
|Up to Rs. 3,00,000
|Rs. 3,00,000 to Rs. 5,00,000
|Rs. 5,00,000 to Rs. 10,00,000
|Above Rs. 10,00,000
|Up to Rs. 5,00,000
|Rs. 5,00,000 – Rs. 10,00,000
| Above Rs. 10,00,000
In addition to the Income Tax amount calculated, based on the above-mentioned tax slabs, individuals are
required to pay Surcharge and Cess.
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.
Health & Education Cess: 4% of Income Tax. (Newly introduced through 2018 Budget)
Total income is divided into 5 heads of income. They are:
Income from salaries
Income from house property
Profit and gains of business or profession
Income from other sources
Income from Salary
Salaried employees form the major chunk of the overall taxpayers in the country and the contribution they
make to the tax collection is quite significant. Income tax deductions offer a gamut of opportunities for
saving tax for the salaried class. With the help of these deductions and exemptions and, one could reduce
his/her tax substantially.
Exemption of House Rent Allowance
A salaried individual having a rented accommodation can get the benefit of HRA (House Rent Allowance). This
could be totally or partially exempted from income tax. However, if you aren’t living in any rented
accommodation and still continue to receive HRA, it will be taxable.
In this article, we try to list some of the major deductions and allowances, available to the salaried
persons, using which one can reduce their income tax liability.
(Salary includes wages, pension, gratuity, fees, commission, perquisites, provident fund contribution, leave
encashment, Central Governments contribution to pension and compensation received for a service)
If you couldn’t submit rent receipts to your employer as proof to claim HRA, you can still claim the exemption
while filing your income tax return. So, please keep rent receipts and evidence of any payment made towards
rent. You may claim the least of the following as HRA exemption.
a. Total HRA received from your employer
b. Rent paid less 10% of (Basic salary +DA)
c.40% of salary (Basic+DA) for non-metros and 50% of salary (Basic+DA) for metros
The Indian Finance Minister, while presenting the Union Budget 2018, announced a standard deduction amounting to
Rs. 40,000 for salaried employees. This was in the place of the transport allowance (Rs. 19,200) and medical
reimbursement (Rs. 15,000). As a result, salaried people could avail an additional income tax exemption of Rs.
5,800 in FY 2018-19. The limit of Rs. 40,000 has been increased to Rs. 50,000 in the Interim Budget
Note:- From FY 18-19, deduction in respect of transport allowance of Rs19,200 per annum and medical
reimbursement of Rs 15,000 per year have been withdrawn. Further, a standard deduction of Rs 40,000 a year will
be allowed from your gross salary.
Income from House Property (HP)
The annual value of property, consisting of any buildings or lands appurtenant thereto of which the assessee
is the owner, other than such portions of such property as he may occupy for the purposes of any business or
profession carried on by him, the profits of which are chargeable to income tax, shall be chargeable to
income tax under the head "Income from House Property".
The property is used for one’s own business or profession.
The property is self-occupied.
It is income from a farmhouse.
It is the property income of a local authority.
It is the property income of a university or an educational institution.
It is the property income of a trade union.
It is property held for charitable or religious purposes.
It is the property income of a political party.
It is the property income of an approved scientific research association.
Annual value of the house property:
The annual value of any property you own is taxable under the head ‘income from house property’. While
there are a few deductions available from this income, income from a property is not taxable under the head
‘income from house property’ when...
The annual value of house property has been defined as ‘the amount for which the property may reasonably be
expected to be let out for a year’.
Rent payable by the tenant.
Municipal valuation of the property.
Fair rental value (market value of a similar property in the same area) of the property.
Standard rent payable under the Rent Control Act.
However, if your property is let out for the whole or a part of the financial year, the gross annual value
will be the amount received during the year as a result of the letting out of the house property. This shall
also exclude the rent that the taxpayer is unable to realize in the financial year.
The following four factors have to be taken into consideration while determining the annual value:
Gross Annual Value:
In the case of self-occupied property, the annual value is taken to be ‘nil’.
In the case of property that is rented out, the gross annual value is the municipal value, the ‘de facto
rent’ (whether received or receivable) or the fair rental value, whichever is highest. If, however, the Rent
Control Act applies to the property, the gross value cannot exceed the ‘de facto rent’ or the standard rent
under the Rent Control Act, whichever is higher.Deduction under Section 24B
This section allows individuals to claim a deduction for the loss under the head ‘Income from House Property’.
It allows a tax benefit on the repayment of the loan of a second house up to INR 2 lakh. The unclaimed amount of
loss may be carried forward for 8 years and set off against house property income. Additionally, any interest
paid on the housing loan is eligible for a tax benefit. Municipal taxes, interest paid on the loan taken for the
house, and 30% of the net annual income is allowed as a deduction
Income from Capital Gains
Capital assets can be a house property, building, land, vehicles, trademarks, patents, machinery, leasehold
rights, and jewellery. Any legal rights including the rights of control or management are also considered as
Capital assets do not include the following:
Stock in trade.
Consumable stores or raw materials held for the purpose of business or profession.
Items held for personal use such as clothes and furniture.
Agricultural land in rural areas.
6.5 percent Gold Bonds, National Defence Gold Bonds, and Special Bearer Bonds.
Gold Deposit bonds under Gold Deposit Scheme.
Capital Gains Tax and Types:
Capital gains tax is a tax that is charged on the profits that he has made by selling his capital asset. For
making it easy for taxation, the capital assets are classified to ‘Short-Term Capital Asset; and ‘Long-Term
Short-Term Capital Asset:
If the shares and securities are held by the taxpayer for a period not more than 36 months preceding the date of
its transfer will be treated as a short-term capital asset.
Long- Term Capital Asset:
If the taxpayer holds the shares and securities for a period exceeding 36 months before the transfer will be
treated as a long-term capital asset.Equity shares which are listed in a recognised stock exchange, units of
equity oriented mutual funds, listed debentures and Government securities, units of UTI and Zero Coupon Bonds’
period of holding will be considered for 12 months instead of 36 months. Transfer is giving up your right on an
asset it includes sale, exchange, compulsory acquisition under any law and relinquishment.
Capital Gains Tax in India:
In India, the long-term capital gains on sale of listed securities exceeding Rs.1 lakh are taxed at 10% as per
the Union Budget 2018. The short-term gains will be taxed at 15 percent. In case of debt mutual funds,
both short and long term capital gains are taxed. The short-term capital gain on debt mutual fund is added to
the income and taxed as per the individual’s Income Tax Slab and the long-term capital gains on debt mutual
funds are taxed at 20 percent with indexation and 10 percent without indexation. Indexation is adjusting the
purchase value for inflation. The indexation increases the purchase cost and lowers the gain.
Income from Business/Profession
The third head of Income Tax heads is Income from Profits of Business in which the computation of the total
income will be attributed from the income earned from the profits of business or profession. The difference
between the expenses and revenue earned will be chargeable. Here is a list of the income chargeable under the
Profits earned by the assessee during the assessment year
Profits on income by an organization
Profits on sale of a certain license
Cash received by an individual on export under a government scheme
Profit, salary or bonus received as a result of a partnership in a firm
Benefits received in a business
Income from other sources
Income from Other Sources is one of the heads of income chargeable to tax under the Income tax Act. 1961. Any
income that is not covered in the other four heads of income is taxable under income from other sources, because
of this, it is known as residuary head of income. All the incomes excluded from salary, capital gains, house
property or business & profession (PGBP) are included in IFOS, except those which are exempt under the Income
Section 56- Incomes taxable only in Income from Other Sources are
Income earned from winning lotteries, crossword puzzles, races (including horse race), gambling or betting of
Money or movable/immovable property received without consideration or inadequate consideration during previous
Interest on compensation or enhanced compensation received;
Advance money received or money received in negotiation for transfer of a capital asset (only if the money is
forfeited and it doesn't result in the transfer of such asset).
Section 57- Expenditures allowed as deductions
Expenses incurred for realisation of dividend or interest income;
Deductions to the extent amount remitted within due date are authorised in respect to contribution towards funds
for the welfare of employees;
Family Pension- deduction is allowed to the extent of 33-1/3% of pension or Rs. 15000 whichever is less;
Deductions for current repairs, insurance and depreciation, will be allowed for income earned by way of lease
A deduction equal to 50% will be allowed for interest received on compensation or enhanced
Section 58- Sum not allowed as deductions while computing taxable income
Interest or salary payable outside India without TDS deduction;
Expenditure concerning winnings from lotteries, crossword puzzles, races, and gambling, etc.; and
Expenses specified in Section 40A
Deductions under chapter VI-A
This is the most important section for deductions for every taxpayer. The maximum exemption limit in the
section is INR 1.5 lakh. There are various avenues like PPF, EPF, term insurance, NPS, etc that could be
claimed under section 80C. Below is the complete list:
Public Provident Fund
National Savings Certificate
National Pension Scheme
Employees’ Provident Fund
Post Office tax saving deposits of five year
Life Insurance Premium
Equity Linked Saving Schemes
Principal repayment of home loan
Sukanya Samriddhi Account Deposit Scheme
Post Office Senior Citizens Savings Scheme
This section allows a maximum deduction of INR 1.5 lakh and it includes the contribution made to annuity plan of
a life insurance provider for the purpose of obtaining pension from the fund.
This section includes the contribution to the Atal Pension Yojana and allows a deduction of a contribution up
to10% of the total salary of salaried employees and 20% of the gross income of non-salaried to the
government-notified pension schemes. The contribution can be deducted from the taxable income under Section 80
CCD (1). In case the employer contributes to the scheme as well, the entire contribution amount can be claimed
as a tax deduction under Section 80CCD (2).
It is important to remember that the complete deduction under Section 80C, Section 80CCC and Section 80CCD (1)
cannot exceed INR 1.5 lakh in aggregate. The additional tax deduction amounting to INR 50,000 under the Section
80CCD (1B) is above this limit.
This section allows deductions on the health insurance premium paid by the taxpayer. The limit for the same is
INR 25,000 for self, spouse, and children and an additional INR 25,000 for parents. The limit for senior
citizens is INR 30,000. Senior citizens above the age of 80 can seek a deduction of INR 30,000 towards their
medical expenditure. An amount of INR 5,000 per family can be claimed as preventive health checkup expenses.
However, this is not over and above the individual limits specified.
An amount of INR 75,000 may be claimed as a deduction for spending on medical treatments of dependents with a
40% disability. This limit is INR 1.25 lakh in case of severe disability.
Under this section, individuals who are below the age of 60 years may claim INR 40,000 for the treatment for
specified critical ailments for self and dependents. The same limit is INR 60,000 for senior citizens and INR
80,000 for very senior citizens.
This section which offered the tax benefits of Rajiv Gandhi Equity Savings Scheme has been withdrawn but if an
individual has claimed a deduction in FY 2016-17, you are eligible to continue with the same for the next two
Interest on loan paid for education is eligible for deduction. Please note that principal repayment on the loan
cannot be claimed as a deduction. The loan should have been taken for yourself, your children, and spouse or for
an individual for whom you are a legal guardian. There is no limit on the amount of interest that can be claimed
as a deduction.
Individuals who are buying a home for the first time may claim an additional deduction of INR 50,000 on the home
loan interest paid. This includes a clause that the loan should be sanctioned in or after FY 2016-17 and the
amount of loan should be less than INR 35 lakh. Furthermore, the value of the house should not exceed INR 50
lakh and the individual should not own any other residential house under his name.
This section includes all the contributions made to charitable institutions as well as relief funds. The
contribution should be made through cheque, cash or in draft. The amount of deduction eligible is INR 2,000.
Moreover, for donations made to political parties, the same deduction could be claimed under 80GGC.
The deduction amount for this section is INR 60,000 per annum and the section is applicable to only those who
neither have the ownership of a residential house nor receive a house rent allowance. The amount of deduction
will be the least of the following:
25% of the total income
INR 5,000 per month
An amount of 10% of the adjusted total income deducted from the rent paid
This section allows a deduction of INR 10,000 from the gross total income of individuals or Hindu Undivided
Family. The deduction is allowed for the interest earned on the deposits made in a savings account in a bank,
cooperative society or a post office. However, the deduction will not be application for the interest earned
from fixed deposits in the bank.
This section allows deduction to individuals who are physically and mentally challenged.
It is advisable to plan the investment in advance in order to avoid the last-minute hassles. In case you are
unable to invest in the right products, you would have to pay the entire tax depending on your income. The above
list of income tax deductions will help you in tax planning and achieving your financial goals.
Penalty for Not Filing Income Tax Return
Not filing your Income Tax Return would result in:
Receiving a notice from Income Tax department
Not being able to obtain refund of excess TDS Deducted.
Penalty interest of 1% per month or part thereof will be charged until the date of payment of taxes. For
returns of FY 2017-18 and onwards, penalty of Rs 5,000 will be charged for returns filed after due date but
before 31st December. If returns are filed after 31st December, a penalty of Rs 10,000 shall apply. However,
penalty will be Rs 1,000 for those with income upto Rs 5 Lakhs.
Not being able to set off Losses. Losses incurred (other than house property loss) will not be allowed to be
carried forward to subsequent years, to be set off against the future gains.
Note: Financial year starts from 1st April and ends on 31st March. For example, the financial year 2018 – 19
would be 1st April 2018 to 31st March 2019. Assessment year is the year immediately following the financial year
wherein the income of the financial year is assessed. Hence, in the assessment year 2019 – 20 the income tax for
the period from 1st April 2018 to 31st March 2019 would be assessed.