Income tax rebate of Rs 12500 to those who earn up to Rs 5 L from April 1: CBDT Chairman

The income tax department will give a "straight rebate" of Rs 12,500 to people having an annual income of Rs 5 lakh from the beginning of next fiscal, thus making their tax liability zero, CBDT Chairman Sushil Chandra said Friday, explaining the proposal made in the Union Budget for 2019-20.

For people earning more than Rs 5 lakh annually, the "old" tax rates will continue. However, people having taxable income of Rs 6.5 lakh per annum too can avail "tax rebate" provided they invest Rs 1.5 lakh in specified investments such as PPF, General Provident Fund (GPF) and insurances, he said.

Explaining the nuances of the proposals announced by Finance Minister Piyush Goyal in his interim budget speech, Chandra said, "This (zero income tax) rebate is only for persons whose taxable income is Rs 5 lakh. If the return filed or taxable income is Rs 5 lakh, then their tax liability will be nil because we will be giving a rebate of the total tax which is due on Rs 5 lakh of taxable income."