7 Things to Know How Your Taxes Changed Since April 1, 2018

Jul 03, 2018 | 1 year ago | Read Time: 3 minutes | By iKnowledge Team

You are preparing to file your Income Tax (IT) returns for 2017-18. After the budget is announced, you take to the internet to read on updated changes. You notice that even though the tax slabs for the working class were not tinkered with, a few changes have been introduced. While these changes would not affect your returns for 2017-18, they will become relevant when you file your returns for 2018-19.

Here are the key tax changes from April 1, 2018.

1. Standard Deduction Re-Introduced

Finance minister Arun Jaitley has re-introduced standard deduction to give provide relief to the working class. He announced a standard deduction of Rs. 40,000 in lieu of transport allowance and medical reimbursement, which will aid pensioners and the non-salaried class.

2. Transport And Medical Allowance May Be Nonexempt

Although standard deduction would provide good cheer to some, the tax benefit on transport allowance and medical reimbursements has been done away with. Presently, the travel allowance of Rs. 19,200 and medical reimbursement of Rs. 15,000 per annum is tax-free for the salaried class. However, from 1st April 2018, these allowances will become a taxable portion of your pay.

3. Hike of 4% In Cess

This year’s budget has replaced the existing 3% education cess on personal income tax and corporation tax with a 4% ‘Health and Education Cess’. Before this, the 3% cess consisted of 2% cess for primary education and 1% cess for secondary and higher education.

4. Long-Term Capital Gains tax comes into effect

The finance minister, in his Budget for 2018-19, announced levying Long-Term Capital Gains Tax (LTCGT) on profits made from share sales. The new tax would be applicable to profits made from the sale of shares on or after April 1, 2018. The acquisition cost necessary to compute the capital gains can be either the actual purchase price or the maximum traded price as on January 31, 2018, whichever is higher.

5. Benefits For Senior Citizens

The 2018 budget has introduced a few beneficial changes for the elderly. These include:

Exemption of Interest on Deposits

The finance minister announced exemption on interest income on bank and post office deposits for all senior citizens. The exemption on interest income will be increased from Rs. 10,000 to Rs. 50,000 for for all Fixed Deposits (FD) and Recurring Deposits (RD).

Exemption of TDS under Section 194A

Under Section 194A of the Income Tax Act, 1961, there will be no Tax Deducted At Source (TDS) levied on interest from all FD and RD schemes.

Hike In Medical Premiums Deduction Limit

A new hike in the deduction limit for health insurance premium and/or medical expenditure from Rs. 30,000 to Rs. 50,000 under Section 80D, has come into effect. The increase in the deduction limit for medical expenses of certain critical illness start from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens). It goes up to Rs. 1 lakh for all senior citizens, under section 80DDB.

6. Dividend Distribution Tax on equity mutual funds

A new tax was introduced this year — Dividend Distribution Tax (DDT) on dividends from equity mutual funds. Hereon, mutual fund houses will be paying DDT of 10% on dividends announced under equity schemes. Although the DDT would be paid by your mutual fund, it could affect you, as the mutual fund will pay the tax from the profits, which will impact the dividends you receive.

7. National pension scheme for non-employee subscriber

Finance Minister has proposed 40% exemption of the total amount payable to the National pension scheme for non-employee subscribers. This means that out of the total corpus accumulated under this scheme, only 60% of it is taxable on maturity.

Conclusion

A number of changes in the taxes in this budget were introduced. Changes included introductions in taxes on investments, dividends, and allowances, and deductions in the taxes for senior citizens. These changes are bound to have a significant impact on you as a taxpayer.

Advt. no.: IA/Jun 2018/4140


Calculate premium for your Term Plan

Prev
Unit-Linked Insurance Plans vs Equity Investments: What Should You Invest In?
Next
5 reasons why you should go for investments instead of gold, this Gudi Padwa
GENDER
Date of Birth
DO YOU CONSUME TOBACCO?
Annual Income
Sum Assured
Select Cover Upto Age
Full Name
Mobile
Email ID
Your Monthly Premium for Aegon Life iTerm Insurance Plan

MOST READ

  • Jul 03, 2018
  • |
  • Read Time: 3 minutes

Section 80C, 80CCC & 80CCD Tax Deductions Explained

  • Jul 03, 2018
  • |
  • Read Time: 3 minutes

Tax Structure in India, Explained

RELATED ARTICLES