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The interim budget presented by the current government was on expected lines, where they tried to give benefits to large segments of the population keeping an eye on the upcoming general elections while trying to maintain fiscal prudence. The government has tried to fulfill its long-standing promise of relaxing income tax limits.

This will result in significant savings for income up to 9 lakh per annum. We have illustrated the savings in the tables below.

We strongly recommend you to plan a regular investment like SIP out of these savings to build a healthy corpus for your long-term goals. It is very easy to spend the money but difficult to save and invest. But imagine if these tax relaxations were not announced. You would have still managed. So why not try to save and invest!

Besides, the budget also made important announcements that would benefit farmers and unorganized workers. Markets should take positive cues from the budget. However, election outcome will continue to weigh on it and volatility is likely to remain till May 2019.

No tax on income up to Rs 5 lakhs per annum: A big boon for middle class

Scenario 1 Annual Income @ ₹ 4.5 lakhs
Earlier Post-Budget
Annual Income 4,50,000  4,50,000 
Taxable income 4,50,000  4,50,000 
Tax liability 10,000 (5% of 2,00,000) 0 (Zero)
Tax Savings 10,000 
Scenario 2 Annual Income @ ₹ 6.5 lakhs
Earlier Post-Budget
Annual Income 6,50,000  6,50,000 
Less: Standard Deduction     40,000      50,000
Less: ELSS investment 1,50,000 
Taxable income 6,10,000  4,50,000 
Tax liability   12,500 (5% of 2,50,000)

+ 22,000 (20% of 1,10,000)

= 34,500 

0 (Zero)
Tax Savings 34,500 
Scenario 3 Annual Income @ ₹ 9 lakhs
Earlier Post-Budget
Annual Income 9,00,000  9,00,000 
Less: Standard Deduction     40,000     50,000 
Less: ELSS investment 1,50,000 
Less: Home Loan Interest 2,00,000 
Taxable income 8,60,000  5,00,000 
Tax liability   12,500 (5% of 2,50,000)

+ 72,000 (20% of 3,60,000)

= 84,500 

0 (Zero)
Tax Savings 84,500