New Delhi: Several budget proposals will kick in from April 1, the beginning of the 2018-19 financial year, in accordance with the propositions made by the Finance Minister Arun Jaitley in the Union Budget 2018.
The reintroduction of tax on long-term capital gains (LTCG) exceeding Rs 1 lakh from the sale of shares, reduced corporate tax of 25 percent on businesses on turnover of up to Rs 250 crore and a standard deduction of Rs 40,000 in lieu of transport allowance and medical reimbursement are some of them will come into effect from Sunday.
Long-term capital gains tax:
The 2018-19 budget had after a gap of 14 years reintroduced 10 percent tax on LTCG exceeding Rs 1 lakh from the sale of shares. In July 2004, the government had abolished LTCG tax on shares and had replaced it with the securities transaction tax (STT).
Currently, 15 percent tax is levied on capital gains made on share sale within a year of purchase. However, it is nil for shares sold after a year of purchase. The indexation benefit for computing tax liability on the sale of shares listed after January 31 will be available, which will come as a relief to investors.
For senior citizens:
While the exemption limit on income from interest for senior citizens has been raised five times to Rs 50,000 per year, the limit of deduction for health insurance premium and medical expenditure has been raised to Rs 50,000 from Rs 30,000 under section 80D of the I-T Act.
For senior and very senior citizens, the tax deduction for critical illness will be Rs 1 lakh from April 1, as against the existing limit of Rs 60,000 for senior citizens and Rs 80,000 for very senior citizens.
Keeping the income tax rates and slabs unchanged, the Union Budget had introduced a Rs 40,000 standard deduction for salaried employees and pensioners in lieu of the present exemption in respect of transport and medical expenses.
The standard deduction, which is provided to salary earners, was discontinued from the assessment year 2006-07. Presently, no tax is applicable on Rs 19,200 of transport allowance and medical expenditure of up to Rs 15,000. This has now been subsumed into the new standard deduction of Rs 40,000 which may mean very little benefit in tax saving considering that health and education cess has gone up.
Super rich and corporate tax:
With regard to corporate tax, the budget had lowered the rate to 25 percent for companies with a turnover of up to Rs 250 crore in 2016-17. The changes will benefit the entire class of micro, small and medium enterprises which accounts for almost 99 percent of companies filing their tax returns. In 2015 Budget, Jaitley had promised to reduce corporate tax from current 30 percent to 25 percent over four years.
Jaitley had retained the 10-15 percent surcharge on the super-rich, while raising the health and education cess, levied on all taxable income, to 4 percent from 3 percent at present.
What will become cheaper and what will become expensive:
Also, the prices of a host of products are set to change as per the proposals made in the Union Budget 2018.
While many imported products including mobile handsets, cars and motorcycles, perfumes, diamonds, footwear, LCD/ LED TV panels will become costlier as the customs duties on these products have been hiked, some items such as imported raw cashew nuts, solar tempered glass and raw materials will become cheaper with the government reducing import duties on them.
Other imported goods that will become expensive, among other things, are - silver, gold, vegetable, fruit juices, including orange and cranberry, sunglasses, miscellaneous food preparations other than soya protein, sunscreen, suntan, manicure, pedicure preparations. preparations for oral dental hygiene, denture fixative pastes and powders, dental floss, pre-shave, shaving or after-shave preparations, bath preparations, truck and bus radial tyres, silk fabrics, coloured gemstones, imitation jewellery, smart watches, wrist watches, pocket watches, furniture, mattresses, lamps, tricycles, scooters, pedal cars, wheeled toys, dolls, toys, video game consoles, articles and equipment for sports or outdoor games, swimming pools and paddling pools, cigarette and other lighters, candles, edible and vegetable oils such as olive oil and groundnut oil.
(With PTI inputs)