8 personal finance changes that have kicked in this April onwards
- 10% LTCG Tax on equity shares and equity mutual funds: Earlier, LTCG on equity/equity-oriented mutual funds were tax-free. However now, all long-term capital gains over and above INR 1 Lakh will be subject to a flat tax of 10%.
- 10% DDT on all Equity Mutual Funds: While dividends from equity/equity-oriented mutual funds were tax-free, this financial year onwards, the same will be subjected to a 10% dividend distribution tax. This will be adjusted for by the dividend-paying entity; proceeds will continue to remain tax-free at the hands of the recipient.
- Introduction of standard deduction: Standard deduction will replace traveling/transport allowance, medical reimbursements expenses which were subject to a maximum of INR 19,200 and 15,000 respectively. The amount of standard deduction will be INR. 40,000. This will help pensioners who normally do not get medical & travel allowance.
- Change in EPF contribution for women employees: EPF contribution for women employees is now capped at 8% instead of the earlier previous 10% or 12%. This will increase the take-home pay for women’s.
- Hike in 80D (medical insurance & Health check-up) deduction for senior citizens: Senior Citizens can now protect their health-related expenses even better as the annual deduction for senior citizens under section 80D has been hiked from INR.30,000 to INR. 50,000.
- Hike in interest exemption limit for the senior citizen: Interest income on fixed deposits and post office deposits is exempt up to INR. 50,000 as compared to the previous INR. 10,000 cap. This will be applicable for all fixed and recurring deposits.
- Rationalising the lock-in period for 54EC Bonds: Gains from the sale of house property can be invested into government-notified 54EC capital gains bonds subject to a maximum of INR 50 Lakh. While the lock-in for these bonds was 3 years, it is now amended to 5 years.
- Increase in income tax cess: Income tax cess has been increased to 4% from 3%. This increases the total tax payable by an individual. Cess is calculated on the total tax amount payable.
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