New rules in the realm of income tax and income tax returns have cropped up with the ascend of the new financial year. These options are not all that difficult to understand, and they are vital since they will end up saving a huge chunk of your salary at the end of the year.
Given below are a few such tax-saving options and how they will impact your financial decisions.
- 10% Tax Levied on Gains Earned from LTCGs: This is a measure that certainly dampened the spirits of fellow investors in India. With the introduction of Union Budget 2018, it came into light that moving forward a 10% tax will be levied on all Long Term Capital Gains that exceed the amount of Rs.1 lakh on financial products such as stocks and equity funds. However, there is a loophole in this new rule. If you are an investor making equity investments, you have the liberty to book all of your gains up until the threshold of Rs.1 lakh. Thereafter, continue investing in places like ELSS that not only guarantees tax saving upto Rs.1.5 lakh but also helps you save a lump sum amount of money for the future, that might help you become wealthy. Over and above that, you could consider ULIPs or Unit Linked Insurance Plans for investment. ULIPs usually help you garner a maturity benefit that is completely tax free. This falls under Section 10(10D) of the Income Tax Act. Despite Union Budget 2018 and all its changes, equity continues to garner more popularity as compared to most financial products in the market today.
- A Rs.40,000 Standard Deduction has been Introduced: The days of collecting medical bills or getting counterfeit ones are long gone! In the earlier days, you used to collect your bills to fulfill the purpose of reimbursement. You would furnish these bills to your employer and he would reimburse the money back into your account. The headers that were prevalent earlier have been discarded with the launch of the Union Budget 2018. According to the newly established regulations, an amount of Rs.40,000 will be deducted henceforth without any doubts or questions! This amount will be the standard deduction in place of medical bills and conveyance allowance.
- Senior Citizens will be Provided with Interest Incomes that are more Tax-free: If you are a senior citizen residing in India and have made substantial investments here and there then you must be earning a certain portion of money as interest. Since after the launch of the Union Budget 2018, the amount of interest income upon which there is exemption has been increased to Rs.50,000. However, for other age groups, the amount remains the same as last year, which is Rs.10,000. This means that senior citizens now have an increased scope of earning a fixed interest income through investments in places such as deposits in banks, and so on.
- Health Insurance Covers for Senior Citizens must be Bought more Frequently: You can make a claim of Rs.50,000 under Section 80D if you have been paying premiums for a health insurance plan. Earlier, this amount stood at Rs.30,000! This in turn means that not only can senior citizens claim this amount but individuals who are below the age of 60 years can also make this claim by investing in a health insurance policy for a member of the family (who is a senior citizen).
There must be adequate investments from your end in all the domains. Your investment plan must be a mix of multiple components such as PPF, ELSS, health insurance policy, life insurance cover, NSC, bank fixed deposits, and so on.