Nowadays people are discussing about a news that no income tax is required upto Rs. 5 lakh. Even some people think that they do not need to file income tax return if their Total Income is below 5 lakh. But the fact is this kind of statements are not really true. Most of the people think that tax free income slab is extended upto Rs. 5 lakh. But the fact is, no changes are made in income tax slabs.
No Income Tax payable upto Total Income Rs. 5 lakh. Is this a fake news?
Actually this news is partially correct. No tax is payable upto Rs. 5 lakh, but conditions apply.
Is I.T. Return filing not mandatory if Total Income below 5 lakh ?
First of all there are no changes made in Income Tax Slabs and rates for FY 2019-20 / AY 2020-21
- Income Tax exemption limit remains Rs. 2.5 lakh for all Citizens below 60 years.
- Income Tax exemption limit remains Rs. 3 lakh for Senior Citizens (60 years or above).
- Income Tax exemption limit remains Rs. 5 lakh for Very Senior Citizens (80 years or above).
It means, Income Tax Return filing is mandatory if your Total Income is above 2.5 lakh (3 lakh for senior citizens and 5 lakh for very senior citizen).
When no tax is payable if Total Income upto Rs. 5 lakh ?
Now the major change is made in Sec 87A of Income tax act. According to Sec 87A taxpayer will get Tax Rebate upto Rs. 12,500/- if his total income does not exceed Rs. 5 lakh.
Explanation:
Suppose a taxpayer's Total Income = 500,000
Exemption = 250,000
Total Income after exemption = 250,000
Tax @5% on Total Income = 12,500
Rebate u/s 87A = 12,500
Tax Payable = 0
It means, if taxpayer's total income is 5 lakh or below 5 lakh, then he will get tax rebate u/s 87A. So, no tax is payable. But obviously he need to file income tax return if his Total Income is above 2.5 lakh (3 lakh for senior citizens and 5 lakh for very senior citizen).
Is every taxpayer whose total income upto Rs. 5 lakh, will get this rebate u/s 87A ?
Only Resident Individuals can enjoy the benefit of tax rebate u/s 87A. This section is not applicable for non residents or other than individuals.
A taxpayer's total income is below 5 lakh, but he filed return after due date. Does he need to pay penalty?
If a taxpayer missed the due date of filing ITR. Then he need to pay penalty u/s 234F.
If a taxpayers total income exceeds Rs. 5 lakh, can he get tax rebate u/s 87A.
If taxpayer's total income exceeds 5 lakh, he does not get tax rebate u/s 87A.
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