Taxpayers in India are demanded to stay in tandem with all new developments in the realm of Income Tax simply because they affect their earnings, in one way or another.
As much as the Union Budget introduced new provisions for the senior citizens and the underprivileged sectors of the society, it failed to do much for the salaried class. Regardless, as fellow taxpayers of the nation, we are obliged to know and accept the new developments that the Budget of 2018 has brought to us. Following are the new additions rules as proposed by the Union Budget 2018:
1. Education and Health Cess
Instead of the earlier 3% education cess, the Finance Ministry has introduced a 4% cess (that includes surcharge) on the sectors of health and education. This will be applicable Financial Year 2018-19 onwards. However, the Budget 2018 has not seen any changes in the tax slabs for HUFs and salaried people.
2. Standard Deduction
According to the proposals of the Budget 2018, an exemption of Rs.40,000 will henceforth be made for medical and transport allowances. Earlier, separate exemptions were made for these two sectors. Rs.5800 will be the net benefit in both cases.
3. Interest Deduction for Senior Citizens
The Union Budget 2018 brought in a revolutionary change in the provisions for senior citizens. From an earlier deduction of Rs.10,000, the Budget has now proposed a deduction of Rs.50,000 pertaining to incomes coming in the form interests from deposits made in banks, post offices, and co-operative societies. There will not be a separate deduction henceforth, under Section 80TTA of the Income Tax Act.
4. Section 80DDB
Under the Section 80DDB, the Budget has proposed a deduction of upto Rs.1 lakh for the treatment of any specific illnesses and disorders, concerning senior and super senior citizens.
5. Section 80D
From an earlier Rs.30,000, the Budget 2018 has introduced a maximum deduction amount of Rs.50,000 for HUFs and individuals who are paying premiums for health insurance policies. On top of that, senior citizens are also allowed deductions on medical expenses under Section 80D.
6. NPS Benefit
Currently, if you are investing in the National Pension Scheme (NPS), you are allowed a 40% exemption that is payable to you upon closure or opting out. This provision, however, was not meant for subscribers who are unemployed. Budget 2018 extended this benefit to all subscribers of NPS.
7. Long-Term Capital Gains
A 10% tax rule has been implemented on the profits earned from long-term capital gains, in case the amount exceeds Rs.1 lakh within a span of a year. Additionally, indexation benefits will henceforth be nullified.
8. Health Insurance Policies
If you have invested in a single health insurance policy that is premium in nature and has a policy term of more than 1 year, then you shall be allowed a deduction based on the proportion, pertaining to the amount of years for which the cover is valid. This, in turn will be dependent on the mentioned monetary limit.
Making use of the online Income Tax Calculator, you will now be able to compute how much tax you have to pay in the approaching financial year. Even though the Budget did not see prominent modifications for the salaried class, the underprivileged sector as well as senior citizens are bound to benefit a lot out of it.