When the government introduced the Union budget on February 1, 2018, it opened up some new avenues to save taxes. The government made various amendments in the tax laws to give some relief to the taxpayers. This article by H&R Block India
1) Standard deduction to salaried individuals and pensioners
Transport allowance and medical reimbursement are two tax deductions which almost every salaried taxpayer easily claims. The Finance Act, 2018 eliminated these two tax benefits. The tax benefit from the transport allowance is Rs 19,200 p.a. (Rs 1,600 p.m.), while from reimbursement of medical expenses, it is Rs 15,000 p.a. At first, it may appear to be a loss of Rs 34,200 to you (Rs 19,200 + Rs 15,000). But, you don’t need to worry as a standard deduction of Rs 40,000 has been brought in their place. This is, in fact, a piece of good news for you since the overall tax benefit has increased by Rs 5,800 (Rs 40,000 – Rs 34,200).
This tax benefit has also been extended to the pensioners. Pensioners were not allowed any tax benefit of transport allowance and medical reimbursement. Therefore, they can gain Rs 40,000 as tax-free income.
2) Enhanced deduction under section 80D
You must be familiar with this deduction under section 80D that you can claim when you pay a premium for medical insurance giving coverage to you or your family. The tax deduction currently allowed is up to Rs 30,000 of the insurance covers you, your spouse or your children. You can get an additional deduction of Rs 30,000 on premium paid if you have a medical cover for your parents aged 60 years and above. If they are aged below 60 years, then the tax deduction cannot exceed Rs 25,000.
However, if anyone of you, your spouse or your parents is not covered under any insurance policy, then you can claim a tax deduction up to Rs 30,000 for the medical expenses incurred on them. Union budget 2018 has extended this benefit to senior citizens as well and increased the deduction limit from Rs 30,000 to Rs 50,000.
Nature of the amount spent
|
Family Member
|
Parents
|
||
Age below 60 years
(value in Rs)
|
Age above 60 years
(value in Rs)
|
Age below 60 years
(value in Rs)
|
Age above 60 years
(value in Rs)
|
|
A) Medical Insurance
|
25,000
|
50,000
|
25,000
|
50,000
|
B) Central Govt Health Scheme
|
25,000
|
50,000
|
–
|
–
|
C) Health Check-up*
|
5,000
|
5,000
|
5,000
|
5,000
|
D) Medical Expenditure
|
–
|
50,000
|
–
|
50,000
|
Maximum deduction
|
25,000
|
50,000
|
25,000
|
50,000
|
Further, the Finance Bill additionally suggests that if there should be an occurrence of single premium medical coverage strategies which give inclusion of over a year, the derivation will be permitted on a proportionate reason for every one of those years for which medical coverage inclusion is given, subject to the predetermined financial breaking point.
3) Increase in as far as possible under segment 80DDB
The assessment conclusion given to citizens for costs caused by the treatment of his own or any relative's basic disease has additionally been raised. Right now, the duty derivation is Rs 80,000 for overly senior native, Rs 60,000 for a senior subject and Rs 40,000 in some other case.
The furthest reaches of reasoning has been expanded to Rs 1 lakh for both senior just as excessively senior natives yet the breaking point continues as before for the citizens as long as 60 years old.
4) Increase in exclusion limit on bank enthusiasm for senior natives
In the AY 2019-20, senior subjects will most likely case derivation up to Rs 50,000 on premium earned from bank stores, post workplaces or co-employable banks according to the arrangements of another segment 80TTB of the Income Tax Act, 1961. Any senior subject who asserts the duty finding under segment 80TTB won't be permitted to guarantee the advantages of area 80TTA from AY 2019-20. Segment 194A has additionally been revised to prohibit banks from deducting the charge from an installment of enthusiasm up to Rs 50,000 made to a senior resident.
5) The enhanced tax cut on the tip
The duty exclusion permitted on tip has likewise been expanded in the Union spending plan 2018. The citizens as of now get an expense exception of Rs 10 lakh which will be raised to Rs 20 lakh. The citizens getting a tip on or after first April 2018 will almost certainly appreciate the expanded tax cut on a tip.
6) NPS withdrawal exception stretched out to non-representatives
Workers putting resources into NPS get exclusion up to 40% of the all-out collected parity in their NPS account at the season of withdrawal when they quit or close the plan. The financial plan 2018 has stretched out this tax reduction to everybody putting resources into NPS.
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