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If you are pretty aware of the Indian Budget 2018, you will know that it was one of give and take. However, keeping the taxpayer in the forefront, it was more of ‘take’ than ‘give’. On one side, Arun Jaitley brought into effect the standard deduction once again and offered few new reasons to cheer to the seniors and also increased the total take-home pay of women who are employed in the workforce.
At the same time, he took away all the travel and medical allowances for the entire salaried employees and instead introduced capital gains tax on equity for the long term and even increased the cess which people had to pay on income tax. Here are few personal finance takeaways that you should learn from Modi government’s latest budget and implement them before the upcoming year.
#1: There’s no change in the slab of income tax for the individuals
Due to the fact that the Indian government had made different sorts of positive changes to the rate of personal income tax which are applicable to the people since the last 3 years, Arun Jaitley left the entire income tax slab unchanged this year. Hence the impact on people is NIL.
#2: Income tax cess increased to 4%
Budget 2018 was said to increase the cess on the income tax, straight from 3-4% and this in turn increased the tax that is payable by all categories of tax payers. This hike will have an impact on all different sections of the taxpayers. Due to this hike, the tax liability of the income bracket with highest tax will increase to Rs. 2625. For the middle income tax payers, their liability will soar up by Rs. 1125 and the marginal increase for the lowest bracket will be Rs. 125.
#3: Reintroduction of standard deduction
Budget 2018 has provided a new standard deduction of Rs. 40,000 from salary income to the employees. If you don’t know what standard deductions mean, it is a flat amount which is deducted from the income before tax calculations on the income. This was a part of the Income Tax Act till the finance minister, P. Chidambaram. This standard deduction will just benefit the non-salaried people and the pensioners.
#4: Transport and medical allowance knocked off from salary
As the Budget 2018 offers yet again the standard deduction of Rs. 40,000 from salary income to the employees, it even takes away annual transport allowance of around 19,200 Rs and medical reimbursement of 15,000 Rs. Once again, the salaried employees will certainly be at a disadvantage. Individuals with income of more than 5 lakh would shell off more tax after the standard deduction. This will have a neutral impact on the pensioners.
Therefore, when you’re a resident of India and you don’t know how to adjust your personal finances in accordance with the Budget 2018, you should definitely take into account the above mentioned factors. Stay on top of your finances and make sure you don’t take any wrong steps which boomerang your decisions in the long run.