Tax Changes You Need to Know about for FY 2018-19

Whether you are a salaried individual, or a self-employed person, paying income tax is inevitable. To determine income tax slabs, India has defined certain parameters. You need to know the income tax slabs and the exemption options to determine your tax payment. The government of India lets you take advantage of specific investment options to get tax exemption. Home loan tax benefit is one way to reduce your tax payment.

Income Tax Slabs—India

As the end of financial year 2018–19 is approaching, it is important to understand the different tax slabs. The tax payable varies with age for resident Indians as seen in the following income tax slabs. For non-resident Indians (NRIs), the age rule does not apply.

For Individuals below the Age of 60

For Individuals between the Ages of 60 and 80 (senior citizens)

For Individuals above the Age of 80 (super senior citizens)

Exemption on Home Loan

Earlier, buying a home meant shouldering the burden of a huge financial investment. But, that is no longer true. With many banks and non-banking financial institutions (NBFCs) offering home loans, buying a home has never been easier.

One big advantage of a home loan is the tax benefit on your equated monthly instalments (EMIs). Each EMI consists of both principal and interest repayment. You may avail exemption on both the components. Benefits can be taken under Section 80C on the principal repayment. Also, the interest repayment may give you an exemption up to Rs.2.5 lakh.

Tax Changes

If you are an individual taxpayer, keep an eye on the changes introduced in the income tax rules. The following changes became effective after the 2018 Union Budget.

• The finance minister increased the cess from the earlier 3% to 4% for personal and corporation income tax.

• A standard deduction of Rs.40,000 became applicable to salaried individuals and pensioners. The exemption allows for conveyance and miscellaneous medical expenses to be discontinued.

• An extra 10% tax will now accrue on long-term capital gains. This is in case investment is made in the stock market and in equity-linked mutual funds. Also, the profits should be more than Rs.1 lakh for the tax to apply. But profit earned on investments made up to 31 January 2018 will not be taxed under this norm.

• A few modifications have been made to ease the tax burden on senior citizens:

• Exemption of tax on interest income from banks and post office deposits has increased from Rs.10,000 to Rs.50,000.

• Deduction limit under Section 80D on health insurance premium payment has increased from Rs.30,000 to Rs.50,000.

• No tax will be deducted at source under Section 194A. This will be applicable to income from all fixed deposit and recurring deposit schemes.

Conclusion

The Union Budget for 2019–20 is expected to bring in further modifications. As a taxpayer, it helps to stay up-to-date on changes proposed in the Union Budget. You can then plan your income tax payments and exemptions in a better way.