Looking for NEET / JEE Coaching? Enquire Now

Know the important changes in the Income Tax for 2018-19

The Finance Minister, in his Budget speech on 1st Fenruary, 2018, has announced some significant changes in the provisions of the Income Tax Act. Know the change which would definitely have impact on the income tax to be calculated during the next financial year.

The Finance Minister Shri Arun Jaitley has presented the budget of the Government of India for the next financial year (2018-19) on 1st February, 2018. In the budget, the Finance Minister has proposed some major changes in the income tax. In this article, the important changes in the income tax proposed (which, in all probability, will be passed) are being discussed.

No change in exemption limit or income tax slabs; Reintroduction of standard deduction

In the proposed budget, the Finance Minister has not revised the exemption limit under Section 80C of the Income Tax Act. It has been kept at Rs. 1,50,000/-. He has also not proposed in the income tax slabs. But the concept of standard deduction has been re-introduced for the salaried people as well as for the pensioners. This will benefit around 2.5 crores salaried individuals and pensioners.

Increase in cess

The Finance Minister has proposed increase in cess from the current 3% to 4%. Needless to say, this has marginally increased the tax burden. For example, if the tax of a person calculated to be Rs. 1 lakh, earlier he/she had to pay Rs. 3,000/- as cess. Now, the person will have to pay a cess of Rs. 4,000/-

New tax on profit on stock investment and equity mutual funds

The Finance Minister has proposed introduction of a new tax amounting to 10% on long-term gains by an investor investing in direct stocks as well as from the equity mutual funds. As per the proposal, profits of more than Rs. 1 lakh from the stock market and also from the equity mutual fund investments held over more than one year will be taxed at the rate of 10%. Presently, there is no tax levied on profit on selling stocks and units of equity mutual funds, if it is held for more than 12 months. However, the investors must note that long-term capital gains made on investment up to 31st January, 2018 (i.e., till the new budget proposal is announced) will not be subjected to the newly-introduced tax.

Tax on distributed income or dividend

In the new budget, the Finance Minister has also introduced a tax of 10% on the distributed income, i.e., the dividend by the equity-based mutual fund. This tax will also cut down the profit of the equity investors in the coming financial year.

Measures announced for senior citizens

For the benefit of senior citizens, the Finance Minister has announced a number of steps. These would help the tax burden of senior citizen taxpayers. The first and most significant one is the increase in the exemption of interest income on deposits in banks and post offices from existing Rs. 10,000/- to Rs. 50,000/-. Furthermore, the deduction limit for health insurance and for medical expenditure has been increased from existing Rs. 30,000/- to Rs. 50,000/- under Section 80D of the Income Tax Act. The Finance Minister has also announced that TDS is not required to be deducted under Section 194A in case interest received by the senior citizens from all fixed deposit and recurring deposit schemes.

Summing up

In the proposed budget, the Finance Minister has not announced any change in exemption limit or the income tax slabs. This has disappointed the salaried people. The disappointment has further increased by the upward revision of cess. However, the Finance Minister has tried to balance by re-introducing standard deduction and announcing various positive measures for the senior citizens.

Related Articles

Definition Taxable Income And How To Calculate Taxable Income

To submit tax return, you need to calculate taxable income on which tax is levied. In this article you will come to know that define taxable income, how to find taxable income, which incomes are included while calculating taxable income and which incomes are excluded or not added while making calculation of taxable income.

Tax Liability While Switching Jobs

In recent times people tend to change jobs very frequently for career growth and higher salary, but they always have this confusion that why so much tax gets deducted when it was already deducted in previous company. This article will explain why and how it happens.

Basic things to know about the Income Tax to be paid by an individual

This article will give you some basic idea in knowing the income tax to be paid by an individual. It also gives you a basic idea about the limitations and some best ways to get tax deductions. This article will be helpful to the people who are coming under the age group of 25 to 35

The 2013-2014 Union Budget India new tax slabs and DTC Bill

This article provides complete information about what is the 2013-2104 Union Budget's new income tax slabs for salaried individuals in India. You will also get details of the new income tax to be paid by senior citizens. The Direct Taxes Code (DTC) Bill is proposed to be passed during the current budget session. In this article you will get to know features of the DTC Bill.

More articles: Benefits for senior citizens Budget proposal 2018 19 Changes in Income Tax Income Tax Income Tax India


Guest Author: N K Sharma17 Mar 2018

I would like to add some points to the article.The concept of standard deduction has been re-introduced for the salaried people as well as for the pensioners.The standard deduction amount has been decided 40,000. Tax slab upto 2.5 lac no income tax. In addition 1.5 lac under section 80 (C).Upto 2 lac house loan interest tax free. Income upto 5 lac will be charged 5% income tax. If we have the proper knowledge of taxation,we can save a fair amount of tax.

Author: Umesh27 Mar 2018 Member Level: Diamond   Points : 3

A detailed article giving nice information regarding the IT structure beyond 1st Apil 2018.

I have also some observations in this regard. There are many new measures announced for the Income Tax applicable w.e.f. 1st April 2018. There are some good deductions provided to senior citizens on their interest earning and that is definitely a good gesture from the Govt.

There is no change in basic slabs and IT rates but we can hope that in future if tax governance improves, these rates may be cut down.

The measures announced for Income Tax beyond 1st April 2018 do not appear popular type but look focussed in bringing more people in tax net as well increase Govt revenue. It clearly shows that Govt is not trying to appease the tax payers for forthcoming elections of 2019 and definitely it is a bold move.

There is reintroduction of long term tax on equity and there is some apprehensions in the minds of people regarding it. In fact, for those who keep their equity investments for long time this tax is a minor thing. For example if a person invests an amount of 2 lakhs in equity for 10 years and sells his holding for 6 lakhs, he makes a gain of 4 lakhs over a period of 10 years and pays about Rs 40000 as capital gain which translates to only Rs 4000 per year. So the unnecessary apprehension in the minds of investor is not a serious one.

Author: K Mohan05 Apr 2018 Member Level: Diamond   Points : 1

I want a clarification from the author and other members who may have the idea as to what is the taxable amount for an Individual who gets income through savings in bank and post office. Suppose a total of rupees 7000 to 10,000 per month as interest has been accrued ,is there possibility for tax to be paid. Moreover I want to know if a person has 10 lakhs as his deposit in the bank and the amount got through a share by selling property, will he have the income tax to be paid. I shall appreciate if some one clarifies the above doubts.

Author: Partha K.05 Apr 2018 Member Level: Diamond   Points : 8

The income as an interest accrued from the deposit in a Post Office, will be added with other income of the concerned person on annual basis, and tax will be calculated. Let us suppose that a man is earning Rs. 50,000/- per month and receiving interest from the Post Office @ Rs. 8000/- p.m., then his annual income will be Rs. 50000/-x12+ Rs. 8000x12=Rs. 6,96,000/- on that financial year and accordingly his tax will be calculated.

If a property is sold within three years of buying it, any profit from the transaction is treated as a short-term capital gain in the hands of the person. This is added to the total income of the owner and taxed according to the slab rate applicable to him/her. Those earning over Rs 10 lakh a year, will have to pay tax @ 30% of the profit from the sale consideration.

Also, if a house property is sold within five years of the end of the financial year in which it was purchased, tax benefits which were claimed earlier will have to be reversed. The tax deduction claimed for the principal repayment, stamp duty and registration under Sec 80C are reversed and the amount becomes taxable in the year of sale. Only the deduction of the interest payment under Section 24B will remain.

In short, if anyone sold his/her property at Rs. 10 lakh, the profit accrued by the person is taxable.

  • Do not include your name, "with regards" etc in the comment. Write detailed comment, relevant to the topic.
  • No HTML formatting and links to other web sites are allowed.
  • This is a strictly moderated site. Absolutely no spam allowed.
  • Name: