5 Major Changes in Income Tax Rules from April 1, 2018

As per financial calendar, New Year starts from April 1, bringing changes to many things in personal finance and every tax payer needs to be aware of the new rules in income tax as these not only impact our earnings but also our day-to-day lives. Right from the introduction of LTCG in equities to the introduction of standard deduction for salaried employees, a number of tax changes have been announced by the Finance Minister. Let’s go through the major 5 tax changes you need to know.

  1. Pay LTCG tax on stock market investments

Profits made through stock market investments are not exempted anymore. Now, you will have to pay 10% tax on your profits if you held equity-oriented mutual funds and stocks for one year. The tax implements to only those whose profits exceed Rs 100,000 in a financial year.

Please note that your profits made till Jan 31, 2018 are protected, as the rule will come into effect for profits made after 31st Jan.

  1. Higher CESS

A new CESS has been proposed: Health and Education CESS. This time it has been increased by the government from 3 percent to 4 percent for individual taxpayers on the amount paid as income tax.

  1. Senior citizens can get medical treatment for specified diseases

Currently, resident individuals and HUFs (Hindu Undivided Families) get benefit of the deduction for the amount proposed for the medical treatment of diseases like malignant cancers, AIDS, etc. For now the deduction of amount is limited to Rs 60,000 for senior citizens and Rs 80,000 for very senior citizens. The new budget has proposed to make enhancements in the deduction limit and increased it to Rs 100,000 equally for both senior as well as very senior citizen categories.

  1. Income tax benefit on NPS withdrawal

In budget 2018, Indian finance minister announced the extended benefit of tax-free withdrawal on NPS (National Pension System) to non-employee subscribers. At present, non-employee subscribers are not allowed to enjoy this exemption. The new budget proposes to extend the benefit of tax-free withdrawal from NPS.

  1. Reintroduction of standard deduction

W.e.f financial year 2006-07, standard deduction (available only for salaried people) got abolished. Now the government has again introduced standard deduction and provided exemption relating to transport allowance and medical expenses. This is surely going to benefit more than 2.5 crore salaried employees. Due to the introduction of standard deduction by the government, the salaried class of India is going to enjoy a flat deduction of Rs 40,000 from the income they pay as tax.