Finance Minister Arun Jaitley disclosed the Union Budget 2018 on Thursday. The budget was more than give than take for the taxpayer. The government reintroduced standard deduction, increased take-home salary of women in the workforce, benefits for senior citizens. On the other hand, they took away the travel and medical allowance of the salaried class, hiked the cess on income tax and introduced long-term capital gains tax on equity.
Check out some personal finance takeaways from the government’s budget:
Standard Deductions gets reintroduced
Finance budget 2018 reintroduced the standard deduction from salary income to employees. The standard deduction is a flat amount of Rs 40, 000 subtracted from the salary income before calculation of taxable income. The standard deduction was the part of the income tax act until the former minister of finance, P. Chidambarm, withdrew it in the budget of 2005.
No change in income tax slabs
Jaitley has left the income tax slabs unchanged for this year’s union budget. He states that the government has made many positive changes in the personal income-tax rate in the last three years.
Income tax cess hike to 4%
The budget also increased the cess on income tax from 3% to 4%. Increasing the tax payable by all categories of taxpayers. Due to this hike, the tax liability for highest tax bracket (more than 15 lakh income) goes up by Rs 2,625. For middle-income taxpayers, it goes up by Rs 1, 125 and for lowest tax brackets by Rs 125.
Medical reimbursement and transport allowance knocked out of your salary
The budget 2018 reintroduce the old standard deductions of Rs 40,000 from salary but it also proposes to knock out existing annual transport allowance of Rs 19,200 and Rs 15,000 medical reimbursements.
Exemption of interest income increased to Rs 50,000 for senior citizens
The budget has proposed to hike the exemption on the interest income on bank and post office deposits for senior citizens.
Senior citizens will benefit from Section 80
The limit of deduction under section 80 D for senior citizens has been proposed to be hiked Rs 30,000 to Rs 50,000. This is good news for senior citizens.
Exemption of interest income on deposits to be hiked for senior citizens
The new budget will hike the exemption on the interest income on bank and post office deposits for senior citizens from Rs 10,000 to Rs 15,000. Which includes fixed deposits and recurring deposits?
Finance Minister introduced DDT on equity MF
Finance Minister has proposed to introduce a dividend distribution tax on equity mutual funds at a rate of 10%. This will give less profit to investors.