7 key Changes in Income tax from April-1, 2018

April 1, the beginning of the new financial year brings into some major changes in the tax structure:

1) Long term capital gains(LTCG) on equity:

After a gap of 14 years, the government reintroduced long term capital gains amounting to Rs one lakh and above at the rate of 10% on the sale of equities and equity mutual funds if they are sold any time after one year of their purchase. This means even If you sell your equity on April2, you will be liable to pay the tax at the rate of 10% on account of long term capital gains. The tax will not have indexation benefits also. However, the capital gains made before January 31 will be exempt. This means any rise before January 31 will not taken into account while calculating the capital gain for the financial year 2018-19.

2) Corporate tax rate:

Corporate tax rate that is currently 30% has been reduced for a set of companies. The corporate entities that have a turnover of upto Rs 250 crore are meant to pay only 25% corporate tax instead of 30% earlier.

3) Interest Income exemption:

Section 80TTB is introduced for senior citizens. The current amount of interest income of Rs10,000 that is allowed to be exempted has been raised to Rs.50,000 in case of senior citizens.

4) Exemption under section 80D:

The income tax exemption under section 80D of the income tax act, allowed for payment and medical expenditure, has also been raised from the current limit of Rs.30,000 to Rs.50,000 for senior citizens.

5) Education and health cess:

The education and health cess has been raised from the current rate of 3% to the new rate of 4%, which will be the only additional levy on the small tax payers this time.

6) Standard deduction :

A standard deduction of Rs.40,000 is allowed for transport and medical expenditure.

7) Medical Treatment:

Exemption for medical treatment for senior citizens has been raised to Rs.1 lakh. Earlier the limit was Rs.60,000 ad Rs.80,000 for senior citizens and very senior citizens, respectively.