A Comparison on Tax Computation Between FY 2017-18 and FY 2018-19

Written By:
Subscribe to GoodReturns
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    There has been no change in tax slabs for the financial year 2018-19.

    But there has been changes in the taxation and they are:

    • A standard deduction of Rs 40,000 on taxable income in lieu of transport and medical expenses
    • Education and healthcare cess increased to 4% instead of 3%.
    A Comparison on Tax Computation Between FY 2017-18 and FY 2018-19

    This changes the way your income is computed as a resident of India. Is this good news?

    Let us compare two individuals who are Indian residents below 60 years of age with salaried income. Individual A has a salaried income of Rs 5 lakhs per annum and Individual B has a salary of Rs 25 lakhs per annum.

    Some notes before we start:

    • Conveyance allowance and Medical allowances are not taxable upto a limit.
    • For the year 2018-19, there will be no conveyance or medical allowance of Rs 19,200 and Rs 15,000 respectively that could earlier be reimbursed.
    • Tax savings depends on tax slabs you fall under.
    • The standard deduction allowable for salaried employees earning an annual income between Rs 75,000 and Rs 5 lakh was equivalent to Rs 30,000 or 40% of the income, whichever was lower. The limit was set at Rs 20,000 for those earning more than Rs 5 lakh.
    • A standard deduction does not require any disclosures, investment proofs or bills.

    Individual A with Rs 5 lakh income:

    A Comparison on Tax Computation Between FY 2017-18 and FY 2018-19

    We can see that it hardly impacts a taxpayer with less than Rs 5 lakh annual income.

    Individual B with Rs 25 lakh income:

    A Comparison on Tax Computation Between FY 2017-18 and FY 2018-19

    The above table shows that the tax payable by the individual will be higher than before. The liability of tax payable will increase with increasing income after these changes.

    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more