In the budget 2018 speech, Arun Jaitley introduced various tax changes which will come into effect from April 1 this year. These tax changes will impact the taxpayers in a number of ways.
Therefore, a taxpayer must be aware of the key changes in the income tax rules that were announced in the budget. From standard deduction for salaried employees to introduction of LTCG on equities, Finance Minister Arun Jaitley has announced various changes in the income tax.
Many of these changes in the income tax are applicable from fiscal year 2018-19. Here are the 5 income tax changes which will come into effect from April 1, 2018:
Introduction of standard deduction
The introduction of standard deduction will likely help benefit around 2.5 crore salaried employees. An additional deduction of Rs 40,000 in place of existent deductions of Rs 19,200 for transport allowance and Rs 15,000 for medical reimbursement will come into effect. The salaried taxpayers will get a flat deduction of Rs 40,000 as a result.
Reintroduction of LTCG
The government has introduced long-term capital gains tax on equity investments. On the gains capital exceeding Rs 1,00,000 on sale of equity share or units of equity-linked funds, 10 percent tax will be applied from April 1.The capital gains till January 31 this year are being grandfathered.
Tax on dividend distributed by equity mutual funds
A 10 percent tax will be imposed on the income generated from the dividend distributed by equity mutual funds.
Higher cess
The government has increased cess to 4 percent from earlier 3 percent on income tax for individual taxpayers on the amount of income tax payable.
Tax free withdrawal on NPS
Finance Minister Arun Jaitley in his budget 2018 speech extended benefit of tax-free withdrawal to non-employee subscribers on withdrawal from NPS (National Pension System). Non-employee subscribers currently don’t enjoy this exemption. The new exemption in form of tax-free withdrawal to non-employee subscribers will come into effect financial year 2018-19.
