Tax changes affecting your life from April 2018


 

There were a number of tax regimes pronounced by budget 2018.  Where corporates got a good news, share traders didn’t seem to be happier.

The hassle of filing income tax returns till 31st March has finally rested. And, what you should focus on next are the Tax changes affecting your life from April 2018.


  • Reintroduction of LTCG tax

One of the most talked about changes was bought by taxing a long time (since 2004) exempt earnings from specific share trading. People dealing in equity shares or equity oriented mutual funds, having gain exceeding Rs. 1,00,000 annually will attract 10% LTCG + 4% cess levy. To the relief of investors they may opt for indexation benefits only on sale of those unlisted shares which got listed after 31st Jan 2018.



Budget 2018 could very well be said as pro senior citizens budget. The pronouncements granted many reliefs to the group, which are stated as under


  • 5 Times enhanced deduction for interest earnings on time  deposits including the FDs. The prevailing limit of Rs 10,000 has been quashed and only senior citizens have been granted exemption to the tune of Rs 50,000 by the way of introduction of sec 80TTB.
  • The limit of TDS U/S 194A  on interest for deposits for senior citizens have been increased from Rs. 10,000 to Rs. 50,000.
  • The existing deduction u/s 80D amounting to Rs 30,000 for senior citizens has been increased to Rs 50,000.
  • Deduction for specified critical illness u/s 80DDB stood increased to Rs. 1,00,000  against Rs 60,000 limit.
  • PMVVY extended till 31st Mrach 2020. Now senior citizens can invest and secure their future with pension yielding at 8% p.a. Interest. The minimum amount of investment being Rs 1.5 lakhs and maximum being 7.5 lakhs (proposed increment upto 15 lakhs). The difference in prevailing interest rate and guaranteed rate of 8% is borne by government under Pradhan Mantri Vaya Vandana Yojana.

  • Very senior citizens

The deduction amount for specified critical illness u/s 80DDB in case of very senior citizens has been raised to Rs 1,00,000, where the old deduction available was restricted to Rs 80,000.


  • Standard deduction welcomed

Standard deduction of Rs 40,000 has came into effect in lieu of transport allowance and medical reimbursement. This announcement has witnessed mixed reaction as not much benefit has been granted to salaried and pensioner group already entitled to TA (19,200 p.a.) and medical reimbursement (15,000 p.a.). But, the ones who did not had such components in CTC are delighted from the introduction of standard deduction. One great thing about this deduction is that it is given to every salaried and pensioner irrespective of any expenses actually required to be made.


  • Health and Education cess

The last full union budget of Modi government introduced health and education cess @4%. The earlier cesses i.e. EC & SHEC totalling at 3% has been withdrawn.


  • Dividend Distribution Tax

Dividends on equity mutual funds though still being tax free in hands of investors will now attract 10% distribution tax post 31st March 2018. This will reduce the net receivable in hands of unit holders.


  • NPS closure exemption

It’s been proposed to exempt 40% of amount received on closure of national pension scheme for self occupied class to bring them at par with salaried class.



Although the amendments bought, faced mixed reaction from different groups of people. But you should take note of these things in order to plan your taxes for the year, deduction of TDS and investment strategies.

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Author


Team Tax2Win