2018 Budget has been announced and their no change in the tax slabs with only few up gradations and pitches to few. Here are 10 income tax changes that will come into effect from April 1, 2018, once the Finance Bill is passed by the Parliament.
Standard Deduction :>
In a relief to the salaried class, the FM has
re-introduced standard deduction of Rs 40,000 from salary income. Apart from salaried class, even pensioners will be allowed to avail the benefit of this deduction. Central Board of Direct Taxes (CBDT) Chief Sushil Chandra has clarified that to avail this tax benefit one would not be required to submit any proofs or bills, it can be claimed straightaway.
re-introduced standard deduction of Rs 40,000 from salary income. Apart from salaried class, even pensioners will be allowed to avail the benefit of this deduction. Central Board of Direct Taxes (CBDT) Chief Sushil Chandra has clarified that to avail this tax benefit one would not be required to submit any proofs or bills, it can be claimed straightaway.
Transport allowance and medical reimbursements to become taxable :>
While standard deduction has been reintroduced, the tax benefit available on transport allowance and medical reimbursements has been taken away. Currently, transport allowance of Rs 19,200 and medical reimbursement of Rs 15,000 per annum is exempted from tax. If the Budget is passed by the Parliament, then starting from April 1, 2018, these two allowances will become a taxable part of your salary.
Cess hiked to 4 per cent :>
Cess levied on your tax liability has been hiked by 1 per cent from the current 3 per cent to 4 per cent. This cess will be called “Health and Education Cess.” So, if you have net taxable income of Rs 5 lakh, your tax outgo will marginally increase by Rs 125. Similarly, for someone with a net taxable income of Rs 15 lakh, their tax liability will increase by Rs 2,625.
Introduction of tax on long-term capital gains (LTCG) on equity and equity-oriented mutual funds :>
Starting from April 1, tax will be levied on LTCG arising from the sale of equity and equity-oriented mutual funds. Earlier, these gains were exempt from tax. It will be charged at a rate of 10 per cent plus cess at 4 per cent. However, to provide relief to small investors, LTCG up to Rs 1 lakh will be exempt from tax per fiscal.
Increase in tax-exempt limit of interest income for senior citizens :>
In a bid to provide relief to senior citizens, Budget has proposed to increase the tax exempt limit on interest income for senior citizens from Rs 10,000 to Rs 50,000. Interest income will include interest earned from fixed deposits (FD) and recurring deposits (RD).
Raising the threshold limit for the TDS for senior citizens :>
Along with the raising the limit of tax-exempted interest income for senior citizens, an amendment has been proposed in the tax deducted at source (TDS) TDS law. As per the proposed change, no TDS will be deducted from interest incomes up to Rs 50,000 a year for senior citizens.
Hike in the deduction limit on medical expenditure :>
It had been proposed to raise the limit of deduction under section 80D and section 80DDB for senior citizens. Under section 80D, the limit has been proposed to be hiked from Rs 30,000 to Rs 50,000. Similarly, under section 80DDB, the limit has been hiked to Rs 1 lakh for all senior citizens from Rs 60,000 (in case of senior citizens) and Rs 80,000 (for super senior citizens).
Dividend distribution tax on equity mutual funds :>
Tax at the rate of 10 per cent will be levied on the dividends distributed in case of equity mutual funds. However, this dividend will remain tax-free in the hands of investors. The tax will be deducted by the fund houses before distribution of dividend. This will impact investors who were relying on dividends from balanced funds as a source of regular income.
