Every year you have to pay certain income tax. With every passing financial year we notice major to minor changes in terms of paying income tax. Every year in the financial budget, the finance minister make moderate changes in the tax systems. Though the tax slabs from last financial year remain unchanged, know exactly what tax changes are made in this financial year of 2018-19.
Introduction of LTCG tax:
LTCG means long term capital gains. If you are earning capital gains on your equities exceeding Rs. 10 lakh then you will have to pay 10% of LTCG tax in the new financial year. The LTCG tax is applicable if you decide to sale your equities after one year of its purchase. If you have earned any gains before January 31st, 2018 then they will be exempt from the tax.
The Return of Standard Deduction:
As per the new financial year 2018-19, a standard deduction of Rs. 40,000 is introduced for transport allowance and medical expenses of salaried employees. Earlier it was Rs. 19,200 and Rs. 15,000 respectively. Those salaried employees who fall within the lower income bracket will get benefitted from this deduction change.
Tax benefits for senior citizens:
In the new financial year of 2018-19 senior citizens of the nation will be facing some positive tax changes. Under section 80D, one Health Insurance premium payments and medical expenses will now receive a tax exemption of Rs. 50,000 instead of Rs. 30,000. One can enjoy the income tax exemption on banks and post office deposits to Rs. 50,000 which was Rs. 10,000 earlier. The senior citizens can now enjoy medical treatment expenses up to Rs. 1 lakh in the new financial year.
Taxation of dividends:
Until now the dividends on equity mutual funds were tax free. But if you are an investor then you will have to pay 10% of DDT i.e. Dividend Distribution Tax on equity from the new financial year.
Hike in Cess Contribution:
Form the new financial year, the health and education cess has been increased by 1% compared to last year. So in total you will have to pay 4% of education and health cess. If you are an individual below the age of 60, know how much cess you may have to pay…
|Tax Bracket||Net Taxable Income||Tax Liability||Tax Increase Due To Cess|
|Up to Rs. 2.5 lakhs||Rs. 2.5 lakhs||Nil||Nil|
|Rs. 2.5 lakhs to Rs. 5 lakhs||Rs. 5 lakhs||Rs. 13,000||Rs. 125|
|Rs. 5 lakhs to Rs. Rs. 10 lakhs||Rs. 10 lakhs||Rs. 1,17,000||Rs. 1,125|
|Rs. 10 lakhs and above||Rs. 15 lakhs||Rs. 2,73,000||Rs. 2,625|