Major Changes in Income Tax Act w.e.f 01.04.2018

By | June 10, 2018
(Last Updated On: June 10, 2018)

Changes in Income Tax Act w.e.f 01.04.2018

Finance Act 2018 has been assented by the President of India on 29th March 2018.sections 2 to 55 of Finance Act 2018 shall come into force on the 1st day of April, 2018

LTCG (Long Term Capital Gain )  reintroduced :-

After a gap of 14 years, the long-term capital gains tax was reintroduced in the by Finance Act 2018.

A 10 % tax will be levied on equity investments exceeding Rs 1 lakh from sale of shares.

[ Before Finance Act 2018  taxpayers used to pay a 15 % on capital gains made on share sale within a year of purchase. If the shares are sold after a year, the tax was nil. ]

TDS Rates FY 2018-19 :-

Rates for deduction of TDS for FY 2018-19 are given in Part II and Part III of THE FIRST SCHEDULE

Note : Health and Education Cess on income-tax has been imposed @ 4%of such income-tax and surcharge  by Finance Act 2018

Refer TDS Rates for AY 2019-20 (FY 2018-19)  and Income Tax Slabs AY 2019-20 ( FY 2018-19 )

[Download Finance Act 2018 PDF File  ]

TDS limits

Tax exemptions were announced on deposits with banks and post offices for senior citizens only. Interest income will now be increased five times from Rs 10,000 to Rs 50,000.
TDS (tax deducted at source) under section 194A will not be applicable on any income on fixed deposit s or recurring deposit schemes for the senior citizens.

TSC Rates FY 2018-19

TCS Rates for AY 2019-20  (FY 2018-19 )

Depreciation Rates

Refer Depreciation Rates under Income Tax [ As amended by Finance Act 2018]

Due Dates of Various Income Tax Payments

Refer month wise Due dates as per  Income Tax Calendar 2018-19

Health and Education Cess  for FY 2018-19 

Health and Education Cess on income-tax has been imposed @ 4%of such income-tax and surcharge  by Finance Act 2018

There will be no Secondary and Higher Education cess  w.e.f FY 2018-19.

Standard deduction for Salaried Employees 

Though the tax slabs were not changed this year, the finance minister reintroduced the standard deduction under the head “ Income from Salary “

A standard deduction of Rs 40,000 will be effective in lieu of transport allowance and medical reimbursement.

The Central Board of Direct Taxes had previously said that the standard deduction can be claimed directly and would not require any proofs or bills to avail it

Refer Income Tax Slabs AY 2019-20 ( FY 2018-19 )

Medical, travel allowances will be taxed

Medical allowances and travel allowances will be taxed from Financial Year 2018-19 .

Before Finance Act 2018 , Medical allowances up to Rs 15,000 and travel allowance till Rs 1,600 per month used to be tax free and could be claimed by furnishing bills.

Limits for Senior citizen on medical expenses  :-

The deduction limit for health insurance premium or medical expenditure was increased from Rs 30,000 to Rs 50,000 under section 80D.
The deduction limit for medical expenses for critical illness was also hiked from Rs 60,000 (for senior citizens) and Rs 80,000 (for very senior citizens) to Rs 1,00,000, under section 80DDB.

Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana was extended up to March 2020, under which senior citizens can invest up to Rs 15 lakh.

Before Finance Act 2018 the limit was  Rs 7.5 lakh per senior citizen.

Dividend Distribution Tax on equity MFs

Dividend distribution tax (DDT) was introduced on equity mutual funds at the rate of 10 % in Finance Act  2018

National Pension System is tax free

The withdrawal of pension money was made tax free for non-employee subscribers.

Before Finance act 2018 , There is no such provision at present.

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