In the budget 2018-19, the Finance Minister Arun Jaitley changes that will affect the taxpayers as they queue up to pay the taxable amount for the year 2017-18. Infact, Arun Jaitley didn’t make any changes in the current tax slabs and the rate of income tax which has come as a relaxation to the taxpayers this year. But, he made few changes in the way people can avail tax benefits in various sections. All these changes will get into effect from 1st April when people will pay their tax for the last financial year.
The financial year 2018-19 includes new reforms such as, relief for senior citizens on interest income and long-term capital gains tax on stocks and equity mutual funds. The salaried people can now avail a flat deduction of which is known as a standard deduction as the finance minister diminished the current two allowances by adding this flat deduction.
The ten rules that will come into Effective from 1st April:
- Tax Payable on Dividend Income Earned from Equity Mutual Funds: Additional 10 percent of the tax will be levied on the dividend distributed by the equity-oriented mutual funds.
- Increased Income Tax benefits on single premium Health Insurance Policies: Now avail deduction on single premium health policies upto one lakh rupees unlike earlier when people were allowed to avail tax benefit upto 25,000 rupees. Although this deduction is applicable on a proportionate base until the policy reached its maturity period.
- Income Tax benefit on NPS withdrawal: The non-employee can now get 40 percent exclusion of the total amount that he or she contributes to the NPS that is National Pension Scheme. The person can avail this exclusion also if he or she wishes to close the account. The non-employee personnel were not getting benefitted from this scheme before the budget for the financial year 2018-19.
- Deduction in respect of interest income to Senior Citizens: The Senior citizens will now receive increased interest income exemption limit on the amount deposited in banks and post offices. Section 80TTA offers 10,000 rupees deduction to the Senior Citizens under the Income Tax Act for all individuals as an interest income from a savings account. Section 80TTB is proposed to be added in the tax deduction plan which will increase the deduction from 10,000 rupees to 50,000 rupees.
- Higher TDS or Tax Deducted limit for Senior Citizens: Now the senior citizens has to pay more TDS on interest income as higher tax deduction is proposed to increase from Rs. 10,000 to Rs. 50,000 in the budget of financial year 2018-19.
- Higher deduction limits under Section 80D of the Income Tax Act for Senior Citizens: Arun Jaitley proposes increase in deduction for senior citizens on payment of health insurance premiums. Currently, the limit has got a hike of 20,000 rupees from Rs. 30,000 Rs. 50,000INR. People below the age of 60 years, can get benefitted from this deduction under Section 80D as a replacement for the previous deduction of Rs. 25,000. In case your parents fall under senior citizens category, then you are eligible for a total deduction of 75,000 including claim an additional deduction up to Rs. 50,000 (Rs. 25,000 + Rs. 50,000), which is greater than the current limit of Rs. 55,000 INR.
- Higher Income Tax deduction for Senior Citizens for medical treatment of Specified Diseases: Unlike earlier the income tax deduction for medical treatment of specific disease has increased from 60,000 rupees to 1lakh INR.
- Standard deduction of Rs. 40,000: Diminishing the transport allowance and medical reimbursement for Rs. 19,200 and Rs. 15,000 respectively, the Finance minister gave a flat deduction of rupees 40,000 which will benefit more than 2 crore salaried people of the country.
- Introduction of long-term Capital Gains Tax on Equity Investments: Now, 10 percent tax also known as Cess extra will be imposed on the Capital Gains for more than Rs. 1lakh on the sale of equity share or units of equity oriented funds. The Finance minister gave relaxation to the taxpayers as the Capital Gain Tax till January 31, 2018, are exempted from the tax payable for the financial year 2017-18.
- Increase in Cess: FM, Arun Jaitley increased one percent cess on the income tax. Now, the taxpayers have to pay 4 percent cess inspite of the earlier 3 percent.
All the above points will affect your tax payable amount for the financial year 2017-18.