Tax Planning for Salaried Employees

Budget 2018 provides a standard deduction of Rs 40,000 from salary income to employees. However, at the same time it is proposed to take away existing annual transport allowance of Rs 19,200 and Rs 15,000 medical reimbursement. Suppose Salary is Rs500,000.

SEC 80D – Deduction in respect of Medical Insurance Premium paid

Budget 2018 has proposed to increase the limit of deduction under section 80 D of the Income-Tax Act, 1961 for senior citizens from Rs 30,000 to Rs 50,000. This amendment will take effect from 01/04/2018 onwards. The benefit is available to individuals for health insurance premiums paid for self, spouse, children, and parents.

Section 80 TTB: Deduction of Interest on Deposits for Senior Citizens

Deduction of under Sec 80 TTB is available from 01/04/2018 in respect of interest income from deposits held by senior citizens.

• Further, no deduction under section 80TTA shall be allowed.
• Section 194A of the Act will also be amended to increase the threshold limit for deduction of tax at source on interest income payable to senior citizens from the existing limit Rs 10,000 to Rs. 50,000 from 01/04/2018.

Section 10(12A)

Any payment from the National Pension System Trust to an employee on closure of his account or on his opting out of the pension scheme referred to in section 80CCD, to the extent it does not exceed 40% of the total amount payable to him is exempt from tax.

From 01/04/2018, same benefit is available for non-salaried employee also.

Section 10(38) and Sec 112A1

Existing regime: Long term capital gains arising from transfer of long term capital assets, being equity shares of a company or a unit of equity-oriented fund or a unit of business trusts, is exempt from income-tax if STT is paid.

Proposed:From 01/04/2018, it is proposed to withdraw the exemption 10(38) and to introduce a new section 112A in the Act to provide that long term capital gains arising from transfer of a long term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust shall be taxed at 10% of such capital gains exceeding Rs1,00,000.

Declaration :

“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received, or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation.”