While we have already begun with our new financial year, there is a lot to look forward in the coming months. Finance Minister, Mr. Arun Jaitley did very less for taxpayers or middle-class salaried employees in Union Budget 2018, yet there are a few tax proposals that are going to significantly affect your earnings and lifestyle in the upcoming year. Herein, we will focus on 10 such tax rules that you should take keynote for the financial year 2019 which will come into effect from April 1, 2018.
Standard Deduction Gets Re-introduced
Coming as a much-needed relief to the salaried class, a standard deduction of Rs. 40,000 for medical expenses and transport allowance has been provided.While the net benefit will reduce down to Rs. 5,800, the pensioners too will be eligible to avail the benefit of this deduction.Moreover, as per Central Board of Direct Taxes(CBDT), availing this benefit would not require submission of any id-proofs or bills and will be applicable to be claimed directly.
Dividend Distribution Tax For Mutual Fund Investors
As per the new amendment, a 10% dividend distribution tax will now be paid for income distributed by equity mutual funds.This will have a huge impact on schemes based on dividend distribution strategy.
Tax Withdrawal Benefit to Self Employed NPS Subscribers
As per now, employees contributing to the National Pension Systems could extract 40% of the corpus amount without paying any taxes at the time of maturity or closure. The same benefit has now been extended to self-employed subscribers of NPS too.
Single Health Insurance Policies Taxable on Proportionate Basis
As per Union Budget 2018, for single premium health insurance policies having term more than 1 year, the deduction shall be allowed on a proportionate basis for the number of years up to which cover is provided. This will allow insurers to go for multiple policies by making use of proportionate and availing the discount.
Hike in Tax-Exempt Limit for Senior Citizens
The budget has raised the tax-exempt limit on the interest income (earned from Fixed Deposits(FD) and Recurring Deposits (RD) for senior citizens (60 plus) by 40,000. While earlier the limit was set to Rs. 10,000, it now is Rs. 50,000.
Stock Market Investments Subjected to LTCG Tax
As per now, mutual fund investors did not pay any tax on the profits earned in equity-oriented stocks for one year.However, as per the new guidelines, a 10% of the profit earned shall go as LTCG tax for profits exceeding Rs. 1 lakhs a year.
Increase in Deduction for Health Insurance, medical expenses catering to Senior Citizens (80 years and above)
As per present guidelines, senior citizens( 60 plus) are entitled to a deduction of Rs. 30,000 on health insurance premium.The same has now been revised to Rs. 50,000. The tax deduction limit on medical costs incurred in the treatment of particular critical illness has been increased to Rs. 60,000-80,000 for senior citizens and Rs. 10,000 for senior citizens aged 80 years and above.