Finance Minister Piyush Goyal’s Budget announcements mainly comprised benefits for the salaried and middle class, farmers and labourers. Among all the major announcements during Goyal’s speech was the income tax “rebate” for people with income up to Rs 5 lakh per year. Goyal said people are not required to pay any income tax on the annual income up to Rs 5 lakh as they will get the full rebate. Those with the gross income up to Rs 6.50 lakh can also save themselves from paying any income tax if they make the right investments in provident funds, specified savings, insurance etc.
But what if your net income is more than that, let’s say up to Rs 10 lakh, and you also own two houses? Can you still avoid paying any income tax? Well yes, you can. If you make right investments utilising several tax saving clauses under the Income Tax Act, you can save yourself from paying tax on your income up to Rs 10 lakh as per the new relaxations announced in Budget 2019, claim tax experts.
Here’s how can do it?
First, claim your revised standard deduction of Rs 50,000. For salaried persons, the standard deduction has been raised from the current Rs 40,000 to Rs 50,000. This will provide an additional tax benefit of Rs 4,700 crore to more than 3 crore salary earners and pensioners.
Next, you can invest Rs 1.5 lakh under Section 80C of the Income Tax Act, which allows you to save deductions on tax-saving bank deposits, Public Provident Fund (PPF), National Savings Certificate (NSC), equity-linked savings schemes (ELSS), subscription to notified securities and deposits schemes, etc.
Also, you can avail tax benefit on your medical insurance premium of up to Rs 50,000 under the Sector 80D of the Income Tax Act. As per tax experts, an individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. If you have taken medical cover for your parents, you are eligible for higher deductions – to the extent of Rs 25,000, if they are less than 60 years of age, or Rs 50,000 if your parents are senior citizens.
The government also allows an additional deduction of Rs 50,000 for investment in the National Pension Scheme (NPS) under sub-section (1B) under Section 80CCD of the Income Tax Act.
Earlier the income tax on ‘notional rent’ was payable if one had more than one self-occupied house. But now, the government has exempted levy of income tax on ‘notional rent’ on a second self-occupied house. It means that if your other house is deemed let-out at, let’s say, Rs 30,000 per month, you can save tax deduction if you plan smartly.
Here’s a complete explainer by taxmann.com on how the salaried people with income up to Rs 10 lakh a year, and owning two houses will not be required to pay any tax.