A slew of modifications that were introduced in budget 2018 could affect your monetary fitness in FY 2018-2019. Not just compensation and intrigue salary, it could additionally effect your return from equities. To keep you refreshed, here are 7 Income Tax Changes Effective from April 1, 2018; one should think about before beginning another budgetary year.
7 Income Tax Changes Effective from April 1, 2018:
Following are the top 7 Income Tax Changes Effective from April 1, 2018, that will affect your financial life now onwards. Have a look:
Until the monetary year 2018, 3% cess (2% for education and 1% for secondary & higher education) was levied for your tax legal responsibility. From FY 2018-19, it has been accelerated to 4% for poor families educational & healthcare needs.
2) Dividend Distribution Tax:
From now onwards 10% DDT will be applicable to dividend option of equity funds. Hence, if you use to invest in dividend option of equity funds to earn tax – free income every month, this is it for you.
3) Health Insurance:
Under Section 80D, the deduction limit for senior citizens has been increased to INR 50,000; earlier which was INR 30,000.
4) Interest Income:
Now, you will not have to pay TDS on interest income of upto INR 50, 000; only, if you are a senior citizen. For Senior Citizen, the exemption limit on FDs and RDs is now INR 50,000; earlier the limit was INR 10,000. TDS will be payable at the source for interest income above INR 50,000. However, interest income from Saving Accounts will remain the same i.e. it will be tax – free upto INR 10,000 as earlier.
5) Long-Term Gain Capital (LTGC):
Now, there are no more tax- free returns on equities; whether you invest for more than one year or for less than a year. Because, from FY 2018-19, you will pay 10% tax (without any indexation benefit) on long-term capital gain exceeding INR 1.00 Lakh. Henceforth, your gain from equities will be considered as short-term, if holding period is less than a year or upto a year. And, the same will be considered long-term, only if the holding period is more than a year. The holding period is calculated from the date of purchase.
6) Pradhan Mantri Vaya Vandana Yojana:
There is a pension scheme for senior citizens by LIC, “Pradhan Mantri Vaya Vandana Yojana”. You get a guaranteed return of 8% over the period of 10 years. The existing investment limit under the scheme is INR 7.50 Lakhs. However, FY 2018-19 onwards, this limit will be INR 15.00 Lakhs. So, now, you can invest more under this scheme.
7) Standard Deduction:
FY 2018-19 onwards, you will get a standard deduction of INR 40,000 on your taxable income. However, in return, the government has taken away the exemption on your other two deductions. These are Transport Allowance of INR 19200 per annum and Medical Reimbursement of INR 15,000 per annum. So, if you are a salaried person, technically you will get a marginal benefit of INR 5,800 on your taxable income; which is not making a big addition to your tax saving.
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