How your income tax has changed over the last 9 years

Mar 19, 2018 | 8 months ago | Read Time: 2 minutes | By iKnowledge Team

Look at the changes in tax structure in India and how you can benefit from them.

The rise in consumer prices has soared significantly in the last 9 years. Take food for example. In 2009, you could buy milk at Rs. 22 a litre, cut to 2018, you now shell out anywhere between Rs. 50 – Rs. 65 a litre. With the rise in prices, the government made some changes in income tax laws that are advantageous to the common man.

Let’s consider how some of these income tax benefits can improve your investment opportunities:

Tax-free income limit

Tax-free income limit means you can earn a specific income in a year without paying tax. In 2009, the tax-free income limit was Rs 1.9 lakh for women below 65 years and Rs 1.6 lakh for other individuals below 65 years. Also, women above 65 years of age could earn up to Rs 2.4 lakhs a year without paying tax.

Today, you can earn up to Rs 2.5 lakhs exempt from tax. People between the ages of 60 and 80 need not pay any income tax on earnings up to Rs. 3 lakhs in a financial year. Also, a person above 80 years of age can earn tax-free income up to Rs. 5 lakhs.

 Medical benefits

Not just food and consumer, but cost of medication too has seen an exponential rise since 2009. But thanks to income tax laws, you can now claim tax benefits on certain medical expenses incurred in a financial year. In 2009-10, the tax limit on insurance premiums was Rs. 15,000 but has now been hiked to Rs 25,000. From April 1, 2018, you will be able to save more on tax, on medical insurance premiums for self, spouse, and children.

Make use of the limit hikes to protect your family against rising medical expenses. Now is the time to increase your medical insurance cover to prevent unforeseen and future costs.

Section 80C

Under Section 80C, you could save tax only up to Rs. 1 lakh in a financial year by making certain investments, such as, life insurance policies. This limit has now been raised to Rs. 1.5 lakh. So, you can now invest the additional Rs. 50,000 in wealth creation assets such as equity, debt and balanced funds.

Get a detailed explanation on tax sections under 80C, 80CCC & 80CCD here.

LTCG Tax and ULIPs

Budget 2018 introduced the Long-Term Capital Gains (LTCG) tax on equity assets including equity shares and mutual funds.  A LTCG tax rate of 10% applies on long-term gains exceeding Rs 1 lakh in a financial. However, the LTCG tax does not apply on a Unit Linked Insurance Plan (ULIP). Thus, you can earn returns from market linked returns without paying any tax.

Under Section 80C, you can claim tax benefit up to Rs 1.5 lakh in a financial year for investing in a ULIP. Aegon Life offers a ULIP known as the iMaximize Plan. The premium paid can be claimed for tax benefits under Section 80C. iMaximize not only offers investment benefits but also risk cover. You can choose from six unit-linked funds depending on  your objectives. Besides, your family is not left to fate in the event of an unfortunate incident.

Conclusion

Rising costs are likely to continue but they need not dampen your spirits. Look at the numerous income tax benefits you can avail from government measures. Use an income tax calculator as your best ally in comparing various investment opportunities. By investing in the right instrument, you can safeguard your family’s future against inflation.


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