Budget 2019: 5 major tax reforms introduced by Modi government last year
Last year, the government had made many key changes in Budget 2018 that impacted the income taxpayers.
The Narendra Modi government will announce its last Budget this year. With general election just months away, Finance Minister Arun Jaitley will present an Interim Budget on February 1. Even though the ruling governmenṭ is not expected to make any major announcements in an interim budget, people can expect a surprise. Last year, the government had made many key changes in Budget 2018 that impacted the income taxpayers. These included long-term capital gains on investment in stocks and equity mutual funds and change in cess on income tax.
As we gear up for this year's budget, here is a look at five major tax reforms announced by the Modi government last year:
1. Standard deduction of Rs 40,000
Last year in budget 2018, Arun Jaitley had introduced a standard deduction of Rs 40,000 for all salaried individuals in place of the 2017 exemption of transport allowance of Rs 1,600 per month (Rs 19,200 per annum) and medical reimbursement of Rs 15,000 per year.
2. Exemption for senior citizens
The government had introduced measures that increased exemption of interest income on deposits with banks and post offices from Rs 10,000 to Rs 50,000. It also increased the deduction limit for health insurance premium and/or medical expenditure from Rs 30,000 to Rs 50,000 under section 80D.
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3. Cess hike
The finance minister had proposed to increase cess on personal income tax and corporation tax to 4 per cent from 3 per cent in 2017.
4. Tax on long-term capital gains
Earlier in 2017, the long-term capital gains from transfer of listed equity shares or units of an equity oriented fund or unit of business trust were exempt under erstwhile Section 10(38). But 10% tax deduction had been proposed by FM in the financial year 2018-19 if such incomes are above 1 lakh.
5. Dividend Distribution tax (DDT)
The government had also introduced 10% Dividend Distribution tax (DDT) on dividend options of equity funds.
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