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Filing Your Income Tax Returns? Keep These Crucial Pointers In Mind

Team BankBazaar


It’s that time of the year when you must be scrambling with documents to file your income tax returns on time. On February 1, 2018, the union budget had introduced a number of changes for FY 2018-19, which can have an effect on your returns filing. If you haven’t filed your income tax returns (ITRs) yet, here is a low down on a few crucial pointers.

Tax slabs for the AY 2019-20

The tables given below indicate the income slabs, tax rates, and tax computations for various classes of citizens as per the Income Tax Act, 1961.

For resident and non-resident citizens under the age of 60 years:

Income Slab Applicable Tax Rate Maximum Tax Amount
Up to Rs.2.5 lakh Nil 0
From Rs.2,50,001 to Rs.5 lakh 5% Rs.12,500
From Rs.5,00,001 to Rs.10 lakh 20% Rs.1 lakh + Rs.12,500
Above Rs.10,00,001 30% 30% of the income above Rs.10 lakh + Rs.1 lakh + Rs.12,500

For senior citizens above the age of 60 years but below the age of 80 years:

Income Slab Applicable Tax Rate Maximum Tax Amount
Up to Rs.3 lakh Nil 0
From Rs.3,00,001 to Rs.5 lakh 5% Rs.10,000
From Rs.5,00,001 to Rs.10 lakh 20% Rs.1 lakh + Rs.10,000
Above Rs.10,00,001 30% 30% of the income above Rs.10 lakh + Rs.1 lakh + Rs.10,000

 

For super senior citizens above the age of 80 years:

Income Slab Applicable Tax Rate Maximum Tax Amount
Up to Rs.5 lakh Nil 0
From Rs.5,00,001 to Rs.10 lakh 20% Rs.1 lakh
Above Rs.10,00,001 30% 30% of the income above Rs.10 lakh + Rs.1 lakh

Notes:

  1. If your taxable income is between Rs.50 lakh and Rs.1 crore, you will have to pay an additional surcharge of 10% on your income tax amount.
  2. If your taxable income is above Rs.1 crore, you will have to pay a surcharge of 15% on the income tax amount.
  3. Health and Education cess will be calculated at 4% of the tax amount.

Increase In Education Cess

The existing Education Cess (2%) and Secondary and Higher Education Cess (1%) will now cease. They will be replaced by a new Health and Education Cess of 4%. Due to this, the total tax payable by you will increase a bit depending on your income category.

Standard Deduction Of Rs.40,000 But No Medical And Conveyance Exemptions

Till FY 2017-18, the tax laws allowed for a deduction of medical allowance of up to Rs.15,000 and a conveyance allowance of Rs.19,200 per year. But, for FY 2018-19, these have been replaced with a single standard deduction of Rs.40,000.

Although the new deduction increases the total deduction by Rs.5,800, the higher cess may increase the total tax you will pay as compared to last year.

Enhanced Tax Deduction Under Section 80D

The maximum deduction for parents’ medical insurance premiums until last financial year was Rs.30,000. For filing your returns for FY2018-19, do keep in mind that the deductions has been enhanced to Rs.50,000. If you are paying the medical insurance premiums for your parents aged more than 60 years, you can claim this additional deduction.

For parents aged below 60 years, the maximum deduction remains the same at Rs.25,000.

You can claim a maximum deduction of up to Rs. 1 lakh if both you and your parent(s) are 60 years or above.

Increase In FD Interest Exemption For Senior Citizens

As a boon to senior citizens, the government has offered to increase the exempted FD interest income from Rs.10,000 to Rs.50,000 from this year onwards. This relates to income from FDs maintained with banks and post offices.

10% LTCG Tax On Equity Income Above Rs.1 lakh

On income from the sale of equity shares and mutual funds linked to equity, you will have to pay a Long Term Capital Gains (LTCG) tax of 10%. This applies to any income that exceeds Rs.1 lakh in a year. For example, if you make Rs.1.4 lakh as equity income, the 10% tax will apply on Rs.40,000 (1.4 lakh – 1 lakh).

These are the changes you need to keep in mind while filling up your IT returns for FY 2018-19. In order to ensure tax compliance, the Central Board of Direct Taxes (CBDT) has also notified number of changes in the income tax return forms and Form 16. It is important to be aware of these changes to have a smooth ITR filing process.

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