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Finance Bill, 2018 Highlights – Taxation for Individuals
1. No Change in income tax rates for Individuals
2. New cess – Health and education cess (4%)
To replace existing education cess (3%).
3. Introduction of Sec. 112A
Tax at 10% on LTCG (> Rs. 1,00,000) arising from transfer of LTCA being equity share in a company or a unit of an equity oriented fund or a unit of a business trust. (Only on transactions where STT is paid) – No indexation is allowed – Gains upto 31st Jan, 2018 to be grandfathered.
4. Benefits to senior and very senior citizens (‘VSC’)
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Introduction of Sec. 80TTB – increasing the amount of deduction from interest income from savings account from Rs. 10,000 (u/s 80TTA) to Rs. 50,000.
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Maximum deduction u/s 80D for medical insurance premium or medical expenditure increased from 30,000 to 50,000. Individuals < 60 can claim benefit if they pay premium for their senior citizen parents.
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Similarly, maximum deduction u/s 80DDB for medical expenditure on specified diseases (Cancer, Neurological disorders, AIDS, etc.) has been increased from 60,000 to 1,00,000. (80,000 to 1,00,000 for VSC).
5. Standard deduction reintroduced for salaried employees
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Rs. 40,000 allowed as deduction from salary income.
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However, exemption of Rs. 15,000 for medical reimbursements and 19,200 for travelling allowance, allowed earlier, have been withdrawn.
6. E-assessment to be done throughout the country increasing transparency.
7. National Pension Scheme - benefit extended to non-employees
40% income withdrawn from NPS is tax free for employees – such benefit has now been extended to non-employee subscribers.
8. Other points
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25% rate of tax for MSME’s (turnover <= Rs. 250 crores in FY 16-17).
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Benefits for start-ups – scheme extended from Apr. 2019 to Apr. 2021, definition of eligible business expanded.
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Customs duty on mobile phones increased to 20% (from 15%), certain parts of TVs increased to 15%
