From higher interest income exemption for senior citizens to long-term capital gains tax on equity investments, lots of income tax changes have been introduced this year, mostly as part of Budget 2018-19. Although the Budget 2018 didn’t see any changes in the tax slabs for HUFs and salaried people, some major changes concerning the senior citizens and in the NSP have been introduced.
Find out some of the important changes in the income tax rules which may impact your tax savings this year:
Interest Deduction for Senior Citizens: A major change brought in the union budget 2018 concerning the senior citizens. From the earlier deduction of Rs. 10,000, deduction of Rs. 50,000 was proposed pertaining to incomes in the form interests from deposits made in banks, post offices, and co-operative societies. However, there will not be a separate deduction under Section 80TTA of the Income Tax Act.
Tax exemption on NPS: Earlier, employees contributing to the National Pension System (NPS) were allowed to withdraw up to 40 per cent of the total corpus without any tax payable upon closure or opting out, which was not meant for subscribers who were self-employed or unemployed. The same benefit has now been extended to self-employed subscribers.
Long-Term Capital Gains: In case the profits earned from long-term capital gains exceeds Rs. 1 lakh within a span of a year, 10 per cent tax will be charged. Further, the indexation benefits will be nullified.
Education and Health Cess: From the earlier 3 per cent on the sectors of health and education, the government raised the cess on income tax to 4 per cent for individual taxpayers on the amount of income tax payable. This will be applicable Financial Year 2018-19 onwards.
Standard Deduction: In the Budget 2018, an exemption of Rs. 40,000 was introduced for medical and transport allowances and reimbursement of miscellaneous medical expenses. Now to claim the standard deduction, you will not be needed to provide any documents and proof, unlike other deductions and exemptions.
Tax on dividends from equity mutual funds: Dividends distribution from equity mutual funds will now attract tax at the rate of 10 per cent, which was earlier tax-free. It will be deducted by the MFs at the time of making the payments.