In the budget 2018 Finance Minister Arun Jaitley has introduced some changes that will come into effect from 1st. April’18. These changes will leave its impact on taxpayers in various ways. Like there is a standard deduction for salaried employees to the reintroduction of long-term capital gains (LTCG). Here’s a list of new tax rules that will come into effect from 1st. April’18.
After a gap of 14 years there’ s a reintroduced of LTCG with 10 percent exceeding Rs 1 lakh from the sale of shares. At present it is 15% tax is levied on LTCG made on share sale within a year of purchase. However, it is nil for shares sold after a year of purchase.
No major changes have been done in Budget 2018 tax slab and so the finance minister has reintroduced the standard deduction method. There will be a standard deduction of Rs. 40,000 in place of existent deduction of Rs. 19,200 for transport allowances and Rs. 15,000 for medical reimbursement.
Also, budget 2018 bring few good changes for salaried and pensioner employees as well. So basically, all the salaried and pensioner employees will gain from new rules introduced in budget 2018. All these related deductions will be claimed directly and no bills will be required as any proof said by Central Board of Direct Taxes.
Change in CESS is another major change done by Finance Minister in Budget 2018 by 4%. This hike is imposed on education and corporate tax. At present taxpayers are paying according to 3 percent – 2 percent CESS for primary & 1 percent CESS for secondary and higher education. Higher in CESS rate is a major part of new tax rules that will come into effect from 1st. April.
The tax exemptions were announced on deposit with post offices and banks for senior citizen only. For senior citizens, under section 194A no TDS will be applicable on any FD scheme or on RD deposit schemes. Also, the interest income will now be increased by Rs. 50,000from Rs. 10,000, which is five times higher than the previous one.
Budget 2018 comes up with an extended benefit of tax-free withdrawal benefit for NPS to non-employee subscribers. The NPS withdrawal will be tax-free for only non-employee subscriber. Earlier it was applicable for only subscribed employees but now it is applicable for all those who are self-employed.
With the induction of standard deduction in Budget 2018 by Finance Minister, medical and travel allowances will also be taxed from next fiscal year. There will be medical and travel allowances up to Rs 15,000 and till Rs 1,600 per month respectively used to be tax-free and could be claimed by furnishing bills.
Finance Minister also announced the extension of PMVVY up to March 2020 with an extended amount of investment i.e. Rs. 15 Lakh for senior citizens only. Earlier it was only Rs. 7.5 Lakh per senior citizen.
In budget 2018, Dividend Distribution Tax was introduced on equity MF at the rate of 10%. The move was proposed to offer a level field for different dividend distributing schemes. This is another new tax rules that will come into effect from 1st. April.