Take a look at these 8 changes:
1. Re-introduction of LTCG at 10% on equity and equity mutual funds: Equity and equity oriented mutual funds were tax free but now, all long term capital gains above Rs. 10 lacs are taxable at 10% flat tax rate.
2. Dividend Distribution tax: Dividend for equity/equity oriented mutual funds are tax free. However, from this year the same will be taxable subject at a 10% dividend distribution tax. While dividends in the hands of investors will remain tax-free companies paying taxes will have to pay the tax proceeds.
3. Standard deduction introduced: Standard deduction is a flat income deducted from the salary prior to the calculation of taxable income. Standard deduction is provided upto Rs. 40,000 from salary income to employees. Pensioners will benefit from the move who did not use to get travelling or medical expenses (If you are a pensioner, read our blogposts on “Pension” to know more).
4. EPF contribution for women: EPF contribution to women has now been capped to 8% instead of 10% or 12% for first three years. The net impact will be on women’s takeaway salary in hands.
5. Limit of deduction under Sec 80D: Annual deduction for senior citizens under sections 80D has been hiked from Rs. 30,000 to Rs. 50,000. This move is beneficial for senior citizens to protect their health-related expenses.
6. Hike in exemption from interest income: Another good news senior citizens is that interest income from FD and post office is now exempt up to Rs. 50,000 as compared to previous Rs. 10,000.
7. Extension of lock-in-period for 54EC bonds: Gain from sale of house property can be invested into government-notified 54EC bonds subject to a maximum of Rs.50 lakhs. The lock-in-period for the same has been changed from 3 years to 5 years.
8. Hike in income tax cess: Income tax cess has been increased from 3% to 4%. This will impact all taxpayers.