With effect from April 1, 2018, there will be some major tax changes for the Financial Year (FY 2018-2019).

The Union Budget 2018-2019, announced by Indian Finance Minister Arun Jaitley has paved the way for new tax provisions that need immediate attention for your financial well-being.

There has been no change in the income tax slab for individual taxpayers, but there are many other revisions that you need to be aware of:

Budget impact on your financial health

  • Income Tax Slab for individual taxpayers and Hindu Undivided Family (HUF) less than 60 years remains the same. Those earning an income of up to Rs 250,000, will have no tax. There were some hopes earlier that this will be revised to Rs 300,000 in the budget this year, but it has been done only for senior citizens.
  • Standard Deduction of Rs 40,000 for salaried class and pensioners, however, there will be:
    • No tax exemptions on transport allowance of Rs 19,200.
    • No tax exemptions on the medical allowance of Rs 15,000.
  • Education and Health Cess was earlier levied at 3 percent on your tax liability, now increased to 4 percent for education and health care needs of the poor.
  • Corporate entities with a turnover of up to Rs 250 crore will now pay only 25 percent corporate tax from the earlier 30 percent. In case of gross turnover exceeding 250 crores in the previous year, the tax rate applicable will be 29 percent.
  • Long-Term Capital Gains Tax (LTCG) has been reintroduced on the sale of shares exceeding Rs 100,000. Gains will be exempted only if they are before the 31st of January 2018.
  • Any gains earned on the same shares after 31st January will be taxed. Investors will need to continue to pay 15 percent tax on the short-term capital gain.
  • Dividend Distribution Tax (DDT) of 10 percent will be levied on dividend option of equity funds.

Benefits for Senior Citizens

  • Income tax slab for Senior Citizens (60 years old or more but less than 80 years) is Rs 300,000.
  • Exemption Under Section 80D of the Income Tax Act, raised for senior citizens from Rs 30,000 to Rs 50,000. (Section 80D allows income tax exemption for payment of health insurance and medical expenditure.)
  • New Section called 80TTB introduced will now exempt tax for interest earned from the bank which had an earlier limit of Rs 10,000 only.
  • Tax deduction for critical illness has been increased to Rs 100,000 for all senior citizens. The earlier limit was Rs 60,000 for senior citizens and Rs 80,000 for very senior citizens.
  • Pradhan Mantri Vaya Vandana is a pension scheme offered by the Life Insurance Corporation of India (LIC) for senior citizens. The investment limit for this scheme has been increased to 15 lakh from the earlier limit of Rs 7.5 lakh.