The Budget 2018 Is Out. Here’s How You Can Save Tax.

Jun 08, 2018 | 6 months ago | Read Time: 2 minutes | By iKnowledge Team

The annual budget can have a far-reaching impact. A small tweak here and the economy’s fortunes changes, a tweak there and your individual plans require a reassessment. This year’s budget was no different. Like every year, there were policy changes made this time too, alterations that will have an impact on how you plan to save tax in the upcoming financial year. So, let’s see how you can modify your tax planning this year.

Employee benefits

Earlier, the total allowance benefit was Rs 30,000 in a financial year. These included transport allowance, medical reimbursement. But, this budget scrapped the allowances, and introduceda yearly standard deduction of Rs 40,000 from salary. What this means is that it will help you to save an additional amount of Rs 10,000 in a financial year.

Interest income

The budget had a lot to offer for senior citizens. People above the age of 60 can now earn interest up to Rs 50,000 in FY 2018-19 without being taxed. This rule applies to interest earned from a recurring deposit, a bank deposit and a post office deposit.

 Cess

This year’s budget hiked the education cess from 3% to 4%. This cess is above and beyond the tax you pay. It is calculated as a percentage of the tax payable.

 Capital gains

Long-term gains made on selling an equity share, a unit of an equity oriented fund and a unit of a business trust will be taxable from April 1, 2018. A Long-Term Capital Gains (LTCG) tax of 10% applies on gains exceeding Rs 1 lakh. So, calculate your gains before you book long-term profits in the next financial year.

Health insurance

There are tax benefits on medical expenses. Under Section 80D of the Income Tax Act, the tax exemption limit on medical expense of a person above 60 years has been raised from Rs 30,000 to Rs 50,000. This benefit can be availed for a preventive medical check-up and on the payment of medical insurance premium.

Under Section 80DDB, an individual or a Hindu Undivided Family (HUF) can claim a tax deduction of Rs 1 lakh for treating a person above 60 years who is suffering from pre-specified diseases. The current limit is Rs 60,000 for a person above 60 years and Rs 80,000 for a person above 80 years of age. You can make use of this benefit to insure self as well as parents.

To summarise, unless you are above 60, this wasn’t particularly a great budget for the middle-class. But one investment option that emerged as the winner from this year’s budget was insurance.

That’s because the government raised the taxable limit on paying insurance premium. So, go ahead and secure your and your loved one’s health by opting for a health insurance.

Advt. no.: IA/May 2018/4024


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