Mumbai: If you happened to have cheered on Rs. 5 Lakh limit announcement, hold on your cheer for a while. Not that it is not a good news, it indeed is but not for all.
The Finance Minister in his Budget speech, while making an announcement for middle class, mentioned the limit for ‘Full Rebate’ upto Rs 5,00,000. It may be emphasised that the word used is Rebate and not Basic Exemption Limit (BEL).
BEL ideally refers to a threshold which is completely excluded for tax purpose even if the income exceeds the said BEL which currently stands at Rs. 2,50,000 for individuals (not being senior citizen). On the other hand, Rebate provides for a marginal relief if the income falls within the rebate limit, however taxed as normal if the rebate limit is exceeded.
Not that the government would lose huge revenues by increasing BEL to Rs. 5 Lakhs, however if the BEL was enhanced to Rs 5 Lakhs, the efforts to broaden the tax base would have been washed out and again leave scope for non compliant citizen.
Summarised as under:
- No tax benefit for those whose income exceeds Rs. 5 lakh.
- Tax slabs have NOT been changed (remains at 5% for Rs 2.5-5 lakh).
- Rebate u/s 87A has been increased to Rs. 12,500 up from 2,500 for assesses having income less then Rs. 5 lakh.