prpri 5 Income Tax Changes affecting Tax planning from 01.04.2018 5 Income Tax Changes affecting Tax planning from 01.04.2018

Tax planning is one of the Key planning in which everyone indulges to get the most out of the benefits available in Income Tax Act.

Budget 2018 proposed some key changes in the income tax laws which will become effective from 01.04.2018. Following are New Income Tax Changes affecting Tax planning from 01.04.2018:

1. Increased deduction in respect of Health Insurance Premium under section 80D for senior citizens:

– The amount of deduction for Senior Citizen is increased to Rs. 50,000/- from Rs. 30,000/- earlier.

– In case premium for more than one year is paid in a single year then only proportionate claim will be allowed subject to the specified monetary limit.

Illustration showing deduction under amended section 80D of Income Tax Act, 1961:

Age of
Deduction for self and family (Rs.) Age of parents Deduction for parents (Rs.) Total deduction (Rs.)
Below 60 years 25,000/- Below 60 years 25,000/- 50,000/-
Above 60 years 25,000/- Above 60 years 50,000/- 75,000/-
Above 60 years 50,000/- Above 60 years 50,000/- 1,00,000/-

2. Tax on Long Term Capital Gain on Sale of Listed equity shares, units of equity oriented fund or unit of a business trust (Section 10(38)):

– From the Current year the Long term capital gain in excess of Rs. 1,00,000/- would be taxed at the rate of 10% (Flat Rate).

– Earlier long-term capital gains made on sale of equity shares and units of equity oriented schemes, after having held for more than 12 months, were fully exempt under Section 10(38).

– Any capital gains arising from the transfer of a Long Term capital asset being equity shares in a company, units of a equity oriented mutual funds or units of a business trust shall not be fully exempt anymore from on or after 01.04.2018.

3. Payment for Late filing of Income Tax Returns under section 234F

– If the assessee does not furnish the return of income on the due dates prescribed under Section 139(1) then the amount of late filing fees will be as under:

◊ If return is furnished after the due date but before 31st December of Assessment Year – Rs. 5,000/- (If total income is up to Rs. 5,00,000/- – Rs. 1,000/-).

◊ In any other Case – Rs. 10,000/-.

4. Deduction under Section 80TTB of Income Tax Act for Senior Citizens on Interest Income

– New Section 80TTB has been introduced which provides benefit to Senior Citizen upto the limit of Rs. 50,000/- (Earlier limit was Rs. 10,000/- under Section 80TTA for everyone).

– It will also cover all the interest received from banks, post office and cooperative banks, whether on fixed deposits, recurring deposits or even saving bank account.

– Earlier deduction u/s 80TTA upto Rs.10,000/- will not be available to senior citizens in respect of interest on saving deposits.

– Further, corresponding amendment has also been made in section 194A which provides that no tax shall be deducted at source from payment of interest to a senior citizen upto Rs.50,000/-.

5. Removal of Conveyance Allowance & Medical Reimbursement and Introduction of Standard Deduction for Salaried and Pensioners

– A standard deduction upto Rs. 40,000/- will be allowed to Salaried person against the amount of Salary received from one or more employers during the year.

– From the Current year the benefit of Medical reimbursement of Rs. 15,000/- and Transportation Allowance upto Rs. 1,600/- per month will not be available.

– This standard deduction will benefit the pensioners also, who normally do not enjoy any allowance on account of transport and medical expenses.

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  1. Ramesh Kumar Thakur says:

    Sir Need Quick Reply from any other Experts :
    what is the meaning of Total Income – either Gross Income or Net Income.?
    need Reply

  2. B M MEHTA says:

    80ttb introduce.If spouce ishouse wife not earning member. But deposited 10 lacin SCSS 2004.INCOME FROM FORM THAT WILL CLUBBED OR DEDUCTION U/S80BB ALSO AVAILABLE TO SPOUSE. PLEASE CLARIFY THIS MATTER

  3. venkatramana says:

    I am a pensioner,aged 69.Can I deduct Rs 40000 as standard deduction from my total income.My gross pension is Rs 2,90,000. What is myeligibility of Std deduction

  4. Mehta Yashwantray Manilal says:

    Sir my pension income rs. 300000|= and interest in come is rs. 200000/-
    total income|= but after all tax
    Benefit and deduction my net taxable income
    Come to rs. 2.50 lakhs so can I submit 15H form
    My bank refuse to accept 15H they told me thatl my total gross income is above 300000|= If I can submit pl inform me it rules. Thankyou

  5. Baljeet Singh Chhabra says:

    Whether Dedn under Sec 80D is 25K for one’s own premium between 60-80 yrs, but it is 50K in case of parents between 60-80 yrs? And what about the deduction of Rs.30K allowed for un-insured parents above 80 yrs in last FY.

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