New Delhi: On February 1, while presenting Budget 2018 Union Finance Minister Arun Jaitley introduced a number of changes that will impact the income tax you pay, ranging from taxing long-term capital gains (LTCG) on investment in stocks and equity mutual funds to change in cess on income tax.
FM Jaitley in Budget 2018 did not change the income tax rates applicable on different slabs. However, he has introduced a number of changes that will impact the income tax you pay.
From taxing LTCG on investment in stocks and equity mutual funds to change in cess on income tax, FM Jaitley has proposed a number of changes like a standard deduction of Rs 40,000 for salaried individuals have also been introduced.
Here are major important changes in income tax rules, proposed in Budget 2018:
1) FM Jaitley has proposed to increase cess on personal income tax and corporation tax to 4 percent from present 3 percent. This will increase the effective income tax an individual taxpayer pays.
2) A standard deduction of Rs 40,000 has been proposed to be introduced for salaried individuals in Budget 2018. According to Finance minister, nearly 2.5 crore salaried employees and pensioners would benefit from this proposal and it would cost the Modi government to around Rs 8,000 crore.
3) According to Budget proposals, salaried individuals will get a standard deduction of Rs 40,000 on income in place of the present exemption allowed for transport allowance and reimbursement of miscellaneous medical expenses.
4) The standard deduction allows for a flat deduction from income of a salaried individual towards expenses an employee would incur in relation to his or her employment.
5)Earlier, the standard deduction was available to the salaried individuals on their taxable income, was abolished with effect from the assessment year 2006-07.
6) FM Jaitley in Budget 2018 announced a new tax of 10 percent on long-term gains from investing in stock markets and equity mutual funds. Under the proposed new tax, profits of more than Rs 1 lakh from stock and equity mutual fund investments held over one year will be taxed at 10 percent.
7) At present, profits from stock and equity mutual fund investments held for more than 12 months are tax exempt. However, LTCG made on investments up to January 31, 2018, will not be taxed.
8) The finance minister also introduced a 10 percent tax on distributed income by equity-oriented mutual funds at the rate of 10 percent.
9) For senior citizens, the Modi government has announced a number of measures that will help ease their tax burden.
10) The exemption of interest income on deposits with banks and post offices to be increased from Rs 10,000 to Rs 50,000, hike in deduction limit for health insurance premium and/or medical expenditure from Rs 30,000 to Rs 50,000 under section 80D and TDS not required to be deducted under section 194A and benefit also available for interest from all fixed deposit schemes and recurring deposit schemes.