BJP led NDA produced its yearly budget a couple of weeks back.It brought notable changes in tax norms.Here is the list of new income tax rules that are effective for the financial year 2018-2019.
- Rs.40,000 Standard Allowance: Currently Transport allowance and medical reimbursement total coming at around Rs.35,000.This will be replaced by Rs.40,000 standard deduction.Pensioners too get this benefit.
- long-term capital gains tax on equity investments: A new 10 percent tax (cess extra) will be applicable on capital gains exceeding Rs. 1,00,000 upon the sale of equity share or units of equity oriented funds.
- Income tax benefits on single premium health insurance policies: Health insurers typically provide some discount if you pay a premium for a few years upfront. But earlier, an individual could claim a deduction only up to Rs. 25,000. Under the proposed changes in Budget 2018, in case of single premium health insurance policies having a cover of more than one year, the deduction will be allowed on a proportionate basis for the number of years for which health insurance coverage is provided, subject to the specified limit.
- Higher cess: The finance minister also raised cess on income tax to 4 percent from 3 percent for individual taxpayers on the amount of income tax payable.
- Tax on dividend income from equity mutual funds: A tax at the rate of 10 percent will be levied on dividend distributed by equity-oriented mutual funds.
Benefits For Senior Citizens:
- Higher income tax deduction for senior citizens for medical treatment of specified diseases: The deduction available payment towards medical treatment of specified disease is proposed to be hiked to Rs. 1 lakh for very senior citizen (earlier Rs. 80,000) and senior citizen (earlier Rs. 60,000)
- Deduction in respect of interest income to senior citizens: Senior citizens will get higher interest income exemption limit on deposits in banks and post offices, including recurring deposits. Currently, a deduction up to Rs. 10,000 is allowed under Section 80TTA of the Income Tax Act to an individual in respect of interest income from a savings account. Under the tax laws, a new Section 80TTB is proposed to be inserted to allow a deduction up to Rs.50,000 in respect of interest income from deposits held by senior citizens. However, no deduction under Section 80TTA shall be allowed for senior citizens
- Higher TDS or tax deducted limit for senior citizens: The threshold for deduction of tax at source on interest income for senior citizens is proposed to be hiked from Rs. 10,000 to Rs.50,000.
- Higher deduction limit under Section 80D of the Income Tax Act for senior citizens: In Budget 2018, the government proposes to increase the deduction for senior citizens on payment of health insurance premiums. The limit is set to go up from Rs. 30,000 Rs. 50,000. For individuals below 60 years of age, the deduction under Section 80D continues to be Rs. 25,000. But if their parents are senior citizens, above 60 years, they can claim an additional deduction of up to Rs. 50,000-taking the total deduction to Rs. 75,000 (Rs. 25,000 + Rs. 50,000), higher than the current limit of Rs.50,000