While income tax slabs and rates were kept unchanged in the Budget 2018 announced on February 1, there are several proposals that will come into effect from April 1.
1. Standard deduction for salaried class: A standard deduction of Rs. 40000 shall be extended to salaried class and pensioners in lieu of medical reimbursement and transport allowance. Presently, no tax is applicable on Rs 19,200 of transport allowance and medical expenditure of up to Rs 15,000. But as the education and health cess has increased this will yield only limited tax saving for the taxpayer.
2. Corporate tax @ 25%: Small businesses with turnover of up to Rs. 250 crore in 2016-17 will attract reduced corporate tax liability @ 25%. This tax is imposed on the net income of the company. Both private and public companies which are registered in India under the Companies Act 1956, are liable to pay corporate tax.
The move is expected to benefit micro, small and medium enterprises which accounts for almost 99 percent of companies filing their tax returns.
Companies with higher turnover will continue to pay 30% corporate rate tax.
3. Cess on income tax hiked from 3% to 4%: Increase in cess on income tax from 3% to 4% will increase the tax payable by all categories of tax payers. The current 3% is made up of 2 per cent education cess and 1 per cent senior secondary education cess. For the lower bracket taxpayers, the tax liability is likely to go up by Rs. 125 while for those in the middle and highest bracket, the liability goes up by Rs. 1125 and Rs. 2,625 respectively.
4. LTCG tax @ 10% for capital gains of over Rs. 1 lakh: Any capital gains made after the cut-off date of January 31, 2018 over and above Rs. 1 lakh from equity sale will attract 10% LTCG tax.
In the current regime, no capital gains tax applies on sale of share after a year of purchase. However, if sold within a year of purchase, a short-term capital gains tax @ 15% applies.
5. For senior citizens exemption limit for interest income has been increased to Rs. 50,000: The Budget 2018 has been extra empathetic with senior citizen taxpayer category raising the interest income exemption limit to 5 times that of the prevailing Rs. 10000 per annum. Also, the deduction available under Section 80D for health insurance premium and medical expenses has been increased from Rs. 30000 to Rs. 50000 per year.
In respect of critical illness, senior citizens and super senior citizens will now enjoy Rs. 1 lakh deduction limit as against Rs 60,000 for senior citizens and Rs 80,000 for super senior citizens.
With PTI Inputs