This new fiscal brings in motion some amended income tax laws applicable from the current year. Let us discuss the major ones.
Benefit of Standard Deduction
Every salary earner as well as a pensioner will be entitled to a standard deduction of Rs 40,000 during the year. Pension from EPFO will also get it. The tax benefit for free medical reimbursement upto Rs 15,000 and transportation allowance upto Rs 1,600 per month are withdrawn from the current year.
Changes in Section 80 D
For health insurance, premium paid for more than one year was allowed as deduction in the year of payment till last year but from current year deduction proportionately for the year is available. For senior citizens the deduction has been raised to Rs 50,000 from Rs 30,000. Enhanced deduction is available for all senior citizens for medical expenses if he does not have any medical insurance policy.
Increased deduction for bank interest for senior citizen
Till last year, a deduction up to Rs 10,000 under Section 80 TTA for interest on savings account with banks, post office and cooperative banks was available. For senior citizens a deduction up to Rs 50,000 covering all interest received from banks, post office and cooperative banks on fixed deposits, recurring deposits or savings bank account is made available under new section 80 TTB from this year.
Long term capital gains provisions
All long term capital gains made on sale of equity shares and units of equity oriented schemes fully exempt under Section 10 (38) are made taxable @ flat 10% beyond one lakh from current year.
However, profits accrued till January 31, 2018 will not be taxed. The market value of the shares or net asset value of mutual fund units as on January 31, 2018 will be taken as cost for computing long term capital gains.
The tenure of bonds under section 54 EC has been increased from three to five years and the benefits is now restricted to long term capital gains on sale of land and building only which was available for all capital assets earlier.
Late fee for delay in filing returns
From the current year, you need to file your income tax return by July 31 unless you are have a business and are required to be audited under any other law, for which the due date is September 30. Earlier, there was no late fee if you failed to file the ITR by the due date. There was some provision whereby the assessing officer could levy a penalty of Rs 5,000 if you failed to file it within 12 months from the end of the financial year after giving you an opportunity to be heard.
From this year you will have to mandatorily pay a late fee if you miss the deadline. The late fee would be Rs 5,000 if the return is filed after the due date but by December 31. Beyond this, the late fee would be Rs 10,000. Late fee is Rs 1,000 if the total income does not exceed Rs 5 five lakhs.
The author is a CA, CS and CFPCM