Major Tax Changes That Will Be Effective From 1 April

Indian Finance Minister Arun Jaitley has presented the Union Budget 2018 at the Parliament on 1 February 2018. BW Businessworld presents to you some of the key tax changes that will come into effect Indian Finance Minister Arun Jaitley has presented the Union Budget 2018 at the Parliament on 1 February 2018. BW Businessworld presents to you some of the key tax changes that will come into effect Indian Finance Minister Arun Jaitley has presented the Union Budget 2018 at the Parliament on 1 February 2018. BW Businessworld presents to you some of the key tax changes that will come into effect

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Indian Finance Minister Arun Jaitley has presented the Union Budget 2018 at the Parliament on 1 February 2018. In the Budget, he proposed some major tax changes that will come into effect from 1 April.

BW Businessworld presents to you some of the key tax changes that will come into effect:

1. Increase In Cess To 4 Per Cent

There was no reduction in personal income tax rates. Proposal to increase cess on personal income tax and corporation tax to 4 percent from present 3 percent has been announced.

2. Relief To Salaried Class – Standard Deduction Introduced

In order to provide relief to salaried taxpayer, a standard deduction of Rs 40,000 has been allowed in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses. However, the transport allowance at enhanced rate shall continue to be available to differently-abled persons. Also, other medical reimbursement benefits in case of hospitalisation etc., for all employees shall continue.

3. Relief To Senior Citizens

For senior citizens, the exemption of interest income on deposits with banks and post offices to be increased from Rs 10,000 to Rs 50,000 and TDS shall not be required to be deducted on such income. This benefit shall be available also for interest from all fixed deposits schemes and recurring deposit schemes.

The limit of deduction for health insurance premium and/ or medical expenditure has been raised from Rs 30,000 to Rs 50,000. All senior citizens will now be able to claim benefit of deduction up to Rs 50,000 per annum in respect of any health insurance premium and/or any general medical expenditure incurred.

Also, the Finance Minister proposed raising the limit of deduction for medical expenditure in respect of certain critical illness from Rs 60,000 in case of senior citizens and from Rs 80,000 in case of very senior citizens, to Rs 1 lakh in respect of all senior citizens.

4. Benefits Under Section 80-Jjaa Extended To Footwear And Leather Industry

Arun Jaitley has proposed to extend the benefits under Section 80-JJAA of the Income-tax Act to footwear and leather industry. Currently, a deduction of 30 per cent is allowed in addition to normal deduction of 100 per cent in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year under section 80-JJAA of the Income-tax Act. However, the minimum period of employment is relaxed to 150 days in the case of apparel industry. This has been extended to footwear and leather industry with a relaxation of minimum period of 150 days.

Deduction of 30 per cent is going to be rationalised by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year.

5. Tax Incentives For International Financial Services Centre

The Budget has proposed to exempt transfer of derivatives and certain securities by non-residents from capital gains tax. Further, non-corporate taxpayers operating in IFSC shall be charged Alternate Minimum Tax at concessional rate of 9 per cent at par with Minimum Alternate Tax applicable for corporates.

6. Cash Payments Made To Trusts

To control cash economy, payments exceeding Rs 10,000 in cash made by trusts and institutions to be disallowed and would be subject to tax.

7. Tax On Long Term Capital Gains 

Tax on Long Term Capital Gains exceeding Rs 1 lakh at the rate of 10 percent, without allowing any indexation benefit. However, all gains up to 31 January 2018 will be grandfathered.

8. Tax On Distributed Income

Proposal to introduce tax on distributed income by equity oriented mutual funds at the rate of 10 per cent has also been announced at the Budget.

9. Reduced Rates For MSMEs

Jaitley has proposed a reduced rate of 25 per cent to companies that have reported turnover up to Rs 250 crore in financial year 2016-17. This will benefit the entire class of Micro, Small and Medium Enterprises which accounts for almost 99 per cent of companies filing their tax returns. The lower corporate income tax rate will leave the companies with higher investible surplus which in turn will create more jobs.

10. Deduction To Farmer Producer Companies 

100 per cent deduction proposed to companies registered as Farmer Producer Companies with an annual turnover up to Rs 100 crore on profit derived from such activities, for five years from 2018-19.

Source businessworld.in
Via businessworld.in

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