Budget 2018: Boon or bane for individual tax payers?
The Finance Minister in his Budget speech mentioned that there would be no changes to individual income-tax rates as the government has made many positive changes in the personal income-tax in the last three years.
Arun Jaitley said the major chunk of personal income tax collection comes from salaried class based on the data of tax paid for financial year 2015-16.
Hence, no major tax relief has been proposed by FM for the salaried class. For example, there have been no changes proposed to the maximum amount of deduction available under section 80C of the Income-tax Act (IT Act).
Jaitley has proposed to introduce a standard deduction of Rs 40,000 for all salaried individuals in place of the existing exemption of transport allowance of Rs 1,600 per month (Rs 19,200 per annum) and medical reimbursement of Rs 15,000 per year.
Some of the other changes proposed by the Finance Minister in his Budget speech:
- Earlier, 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 has been proposed by FM in the financial year 2018-19 if such incomes are above 1 lakh.
- The education cess has been proposed to be increased to 4% from 3% and has been named as ‘health and education cess.’ The increased 1 % will be used for the education and healthcare of the people falling below the poverty line and rural families.
- For senior citizens, the existing deduction of up to Rs 10,000 for interest on savings accounts is proposed to be increased to Rs 50,000. The interest on any deposits including fixed deposits would also be eligible for deduction.
- FM also proposed the deduction for health insurance paid by or on behalf of the senior citizens to be increased from Rs 30,000 to Rs 50,000.