Budget 2018 Impact on Salaried: Tax changes for Common man!
The much awaited moment of the new year finally arrived. Budget 2018 was presented on the morning of 1st February 2018 accompanied by huge expectations from different class of taxpayers and individuals throughout the country. While a lot of amendments and proposals have been made towards the financial and economic front. What’s in store for the salaried employees? What are the various income tax benefits offered to the salaried individuals in this year’s budget? What are the changes that shall impact the common man?
Every year when the budget is about to roll out, all individual eyes are glued to the screens to catch up something favourable inside. Salaried persons are the most curious ones looking for some exemptions or deductions that can help save their money in a legitimate way.
So, here we shall be talking about the important Union Budget 2018-19 highlights and its implications especially on the salaried employees.
Budget Impact on salaried individuals & Common man:
1. No change in Income Tax slabs:
As usual, a sharp change in the income tax slabs was in the Budget expectation list of lakhs of salaried individuals. But, nothing of that sort actually happened. The income tax slabs rates for financial year 2018-19 remain similar to the Income tax slabs of previous financial year 2017-18.
2. Increase in Cess:
The education cess that was previously charged @2% for primary education and 1% for secondary & higher education that amounts to total 3% has now been increased. The same has been replaced by “Health and Education Cess” that shall be charged @4% on your tax payable. Here, also you shall be shedding extra 1% in the form of increased cess.
3. Standard deduction introduced:
A flat standard deduction amounting to Rs.40000 has been brought up again (This used to be prevalent few years back). This shall be allowed from the income of a salaried person towards the expenses incurred. A bit of relief for salaried individuals!
But, wait! Nothing much to be excited! This has been given in lieu of the earlier transport allowance and medical reimbursement that a salaried employee used to avail. Now, what does this imply? Let us simplify a bit for you…
Remember, the Medical reimbursement of Rs.15000 and Transport allowance of Rs.1600 per month i.e. Rs.19200 per annum that you were allowed has now been removed. So, if your earlier salary package contained medical and transport allowance, the net increased benefit for you as a salaried individual shall amount to Rs.5800 only.
Standard deduction = Rs.40000
Less: Previous benefits = Rs.34200 (Medical+Transport)
Net increased deduction or benefit = Rs.5800 only
So, if you are an individual below 60 years of age and fall in the 5% tax slab, you shall be able to save Rs.290 only that just amounts to a small fraction of your total tax amount. While those in the highest tax slab of 30% can enjoy upto Rs.1740 tax savings.
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4. Long Term Capital Gain Tax introduced:
Much to the expectations and rumours on bringing back of the LTCG tax. Here, came the final verdict.
- LTCG on LTCG tax @ 10% has been introduced on Equity if LTCG>1 lakh without indexation.
- Now, be ready to shed out Long Term Capital gain tax @10% on your mutual funds investment gains in excess of Rs.1 lakh as well. This surely has affected not only the investors but taken the markets by a big surprise.
- Wait! This is not it! You won’t get any indexation benefit (or inflation adjustment in common terms) while calculating your long term capital gains on equity.
In simple words, from 1st February, 2018 if you sell stocks or equity mutual funds that you have held for long term and the gains exceed Rs.1 lakh then you need to pay 10.04% tax on it (including cess).
From the point of view of personal savings and an investor’s perspective, the restoration of this LTCG tax is going to have a wider influence. This move shall affect not only the salaried class but its eventual impact might be felt on all category of investors.
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5. Bouquet of benefits for Senior Citizens:
Senior citizens are the ones who have actually received a good range of benefits in the Union budget 2018 covering their savings and health protection.
- Tax exemption limit on Interest income raised: This tax benefit has been extended from Rs.10000 to Rs.50000 per financial year. This includes interest from bank savings account, Post office saving schemes and interest on fixed deposit and recurring deposits also. This implies that no TDS under section 194A shall be deducted a Senior citizen’s income upto the specified limit of Rs.50000. A significant rise in savings of retired senior citizens is surely something to rejoice.
(In financial year 2017-18 the tax deduction under section 80TTA on savings account interest upto Rs.10000 was the only available option).
- Deduction on Health insurance premium under Section 80D: This has also been increased from Rs.30000(F.Y.2017-18) TO Rs.50000 (F.Y. 2018-19)
- Exemption on Medical exemption for critical illness under Section 80DDB: This limit has been extended to Rs.1 lakh from the earlier Rs.60000(senior) and Rs.80000(super-senior) exemption.
- Pradhan Mantri Vaya Vandana Yojana: Till May 2018 the limit Rs.7.5 lakhs investment limit. The same has been hiked to Rs.15 lakhs investment limit.
- Standard deduction benefit to pensioners: This is a real bonanza for retired individuals receiving pension. They can enjoy the standard deduction benefit which shall reduce their tax liability substantially.
The salaried class had high hopes in this year’s budget. But, as it is said that you can’t please everyone in a single go. So, Budget 2018 although could not meet everybody’s expectations. Some sections of society hailed it while others had a set of different reactions. You ought to get a mixed response whenever certain policy and procedures are modified or newer ones are brought forward. A good news for some and not so good for others! That’s how it is!
However, the emerging policies and new amendments are anyways beneficial as far as they lead to the overall development of the country and economy of India.
Are you a salaried employee? Did you check the tax changes this budget brought for you? Has the budget met your overall expectations? What additional income tax benefits were you thinking to get? Feel free to share your valuable feedback.https://fintrakk.com/budget-impact-salaried-tax-benefits-common-man/Budget Impact on Salaried Individuals: Tax changes for Common manhttps://fintrakk.com/wp-content/uploads/2018/02/budget18-e1518159494331.pnghttps://fintrakk.com/wp-content/uploads/2018/02/budget18-e1518159494331.pngTaxationbenefits for salaried,Budget 2018,budget 2018 highlights,budget 2018 impact on salaried,LTCG tax,standard deduction,tax benefits for salaried,tax changes for salariedThe much awaited moment of the new year finally arrived. Budget 2018 was presented on the morning of 1st February 2018 accompanied by huge expectations from different class of taxpayers and individuals throughout the country. While a lot of amendments and proposals have been made towards the financial and economic...admin firstname.lastname@example.orgAdministratorFintrakk