What Does Budget 2018 Mean For You?
We all are immensely deft in planning our household budget. And of course we should be!! After all, we are the finance ministers of our own small kingdoms. Would you like to know what has Mr. Jaitley planned for the country Which might impact our planning too? Read on to find out.
Relief to Salaried Tax Payers
A standard deduction if Rs. 40000 will be allowed to salaried professionals. However, this will be in lieu of the present transport allowance and medical allowance. So basically, the actual benefit is only Rs. 40000-19200-15000 = Rs. 5800. On this amount, you save the tax. So if you are falling in 20% tax bracket (which is salary till Rs. 10 lac), the actual savings is Rs. 5800*20% = Rs. 1160
Incentive to Women
Women employees’ contribution to EPF now reduced to 8% from the earlier 12%. This reduced contribution will be for the first 3 years of employment. This moves will bring in more take home for women.
Also, paid maternity leave is now increased from 12 weeks to 26 weeks, along with the provision of crèches. But honestly, the crèche facility was made mandatory since 01.07.2017. However, it is highly sad to note that hardly any company has actually implemented this.
Exemption of Interest income on deposits with banks and Post Offices have been increased to Rs. 50000/- from current Rs. 10000/-. TDS will also not be deducted on this amount.
What does this mean: Earlier, if your interest income exceeded Rs. 10000, banks would deduct tax at source. But considering most senior citizens would not fall under the tax paying circle, this exemption is a welcome step as now they would not need to file returns and claim exemption. However, those senior citizens who have taxable income would still be required to pay their taxes.
Limit for health insurance deduction for senior citizens have been raised to Rs. 50000 from current Rs. 30000 under Section 80D
What does this mean:
Since with age, the health insurance premium increases, this step is a great relief to senior citizens as they would now be able to claim a deduction of premium paid till Rs. 50000
- Also, the government has raised the limit for deduction of medical expenditure in respect of certain critical illness (as specified) to Rs. 1,00,000 under 80DDB in case of all the senior citizens
- The government has also extended the 8% guaranteed pension plan to March 2020. This pension plan is also meant for senior citizens. The extention to March 2020 and the increase in amount to Rs. 15 lac would be highly beneficial to them.
Tax on Long Term Capital Gain
What is Long Term Capital Gain on equity : Any gain arising from sale of share after 1 year of its purchase is called Long Term Capital Gain
Position uptil now: Till 31.01.2018 (the day before budget was announced), no tax was to be paid on such profit.
Position now: From 01.02.2018 ( the day of budget), if LTCG is more than Rs. 1,00,000 then 10% tax will have to be paid on such amount in excess of Rs. 100000. For eg, if LTCG is Rs. 1,25,000 then 10% tax to be paid on Rs. 25,000
Dividend on Mutual Fund
The dividend received from mutual funds was tax free till date. However, from now 10% tax has to be paid on it. However, the company will deduct and pay such tax and you will receive reduced dividend.
What will become expensive?
If you are fond of purchasing imported goods, the following are set to cost you more
- Mobile Phone
- Edible Vegetable Oil like Groundnut Oil, sunflower oil, refined oil
- Imitation jewellery
These are the major things which would have a direct impact on us. Personally, since this is the last full budget before elections, the hopes were really high that it would try to woo the middle class. But looks like Mr. Jaitley is in no mood for that. The middle class were the people who stood hours in lines for demonetisation and still supported it. A better reward was expected from the government for them. All in all, a lukewarm budget.
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