Article discusses 27 Important Changes in Income Tax Provisions by Union Budget 2018 which includes changes related to Taxation of Long Term Capital Gain, Newly Introduced Standard Deduction for Salaried Employee, Deduction for Senior Citizen under Section 80TTB, Increase of Income Tax Cess Rate to 4% etc.

Some Important Income Tax Amendments Budget 2018

1 Tax on Long Term Capital Gain Under Income Tax Act, 1961 Equity shares & Mutual Funds LTCG >1Lac taxable @ 10%. Indexation benefit for investment in above after 31.01.2018 is available
2 Standard deduction on salary income Rs. 40k for Salaried Employees
3 Exemption Of Transport allowance & medical reimbursement not available any more.
4 Senior Citizen – Section 80TTB For those over 60 Years, Exemption of Rs.50k on Interest Income from deposits of Banks, Co-op banks & Post Office & no TDS on same.
5 Senior Citizen – Section 80D Sec. 80D Deductions for senior citizens raised to Rs. 50000
6 Senior Citizen – Section 80DDB Section 80DDB Enhanced deduction to senior citizens for medical treatment to Rs. 1 Lakh
7 NPS For Self employed assessees exempted withdrawal @ 40% of accumulated corpus on maturity or account closure
8 Section 54EC Lock In period increased to 5 years from 3 Years
9 Cess rate Increased to 4% in the name of ‘Health & Education Cess’
10 Health Insurance – Section 80D In case of Single premium policy having cover of > 1 year deduction will be on proportionate basis for the years for which cover is provided, subject to limits.
11 Gratuity Received on or after 1st April, Basic Exemption Limit increased to Rs. 20 Lac.
12 Capital Gain No CG Tax if variation in Stamp duty & actual consideration is upto 5% i.e if Sale consideration is < Stamp authorities rate.
13 Conversion of Stock in trade to Capital Asset will be liable to Tax, Consideration – FMV on the date of conversion.
14 Exemption to Non residents from transactions entered via recognized stock exchange located in IFSC, if consideration paid or payable in Foreign currency.
15 ICDS Inventory not being listed will be valued at cost & rest securities shall be valued at cost or NRV, whichever lower.
16 25% Tax rate Domestic companies whose turnover does not exceed 250Cr.
17 43(B) Applicable to charitable trusts too.
18 TDS Non deduction of TDS on expenses will attract disallowance in hands of Charitable trusts too.
19 80JJAA Benefit extended to footwear & leather industry, No. of minimum days reduced to 150 & benefit of this section @30% will be to those new employees who is employed for minimum period during the 1st year but continues to subsequesnt year, such deduction will be available in subsequent year.
20 2(22)(e) Dividend Taxable in the hands of company @30%
21 276CC Companies are excluded from said Section i.e even if no tax liability and return filed late no exemption under this section will be allowed.
22 AMT For unit located in IFSC deriving sole income from Foreign Exchange AMT will be 9%.
23 44AE In the case of heavy goods vehicle (more than 12MT gross vehicle weight), the income would deemed to be Rs. 1,000/ton of gross vehicle weight or unladen weight/month for each goods vehicle.
24 115BBE No deduction can be made even in case where additions are made by the Assessing Officer as unexplained income. (Applicable retrospectively from Assessment Year 2017-18.)
25 271J Appeal can be filed by with ITAT against the penalty order of Assessing Officer. (Applicable from AY 2018-19)
26 193 Person responsible for paying to a resident any interest on 7.75% Savings (Taxable) Bonds, 2018 shall deduct tax @ 10% therefrom, if the interest payable on such bonds exceeds Rs. 10,000.
27 2(22)(d) Widens the scope of the term ‘accumulated profits’.In the case of an amalgamated company, accumulated profits, whether capitalised or not, or losses as the case may be, shall be increased by the accumulated profits of the amalgamating company, whether capitalized or not, on the date of amalgamation.

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