How seven tax changes will transform your lifestyle
is the third day of a new financial year. This year, you will pay more tax on some things and less on others. Older people will laugh harder in their morning laughter clubs as they benefit the most and mutual fund investors will cry some more. We list seven changes that you need to note for FY19.
PAY LONG-TERM CAPITAL GAINS TAX ON EQUITY
Get ready to pay tax on longterm profits from your equity investments. Till now, you paid no tax on your profits if you held stocks and equity-oriented mutual funds for one year, but from this year, you will have to pay a tax of 10% of the profit if your profit exceeds ₹100,000 a year. Remember that your profits till January 31, 2018 have been grand-fathered, or are protected. Profits made after this date will be taxed if held for a year.
THE SALARIED WILL ENJOY A STANDARD DEDUCTION OF ₹40,000
A reduction of ₹5,800 in taxable salary is in store for the salaried. They have lost the tax-exempt annual transport allowance of ₹19,200 and medical reimbursement of ₹15,000, but gained a standard deduction of ₹40,000, giving a net reduction of taxable salary income of ₹5,800. There is no need to submit medical and transport bills to the employer this year.
THE 60-PLUS GET ₹50,000 TAX-FREE INTEREST
All types of deposits with banks, co-operative banks and post offices held by all categories of senior citizens (60-plus) will now have interest up to ₹50,000 a year tax-free. Earlier, this limit was ₹10,000 for all income-tax assesses. It has now been raised for senior citizens by ₹40,000.
₹20,000 ADDITIONAL DEDUCTION TO 60-PLUS ON HEALTH PREMIUMS
Senior citizens now get a deduction for health insurance premium under section 80D of ₹50,000, up from ₹30,000 last year. There is also a hike in the deduction limits for medical costs on specified critical illnesses from ₹60,000-80,000 for senior citizens and ₹100,000 for very senior citizens who are 80 years and above.
INCREASE IN LOCK-IN PERIOD FOR INVESTMENT IN 54EC BONDS
Long-term profits from real estate sales are tax-free if invested in specified bonds under Section 54EC. Profits become long term if the asset is held for at least two years. Till last year, you had to stay invested in the 54EC bonds for at least three years to enjoy the tax break, but from this year, your money will be locked in for five years.
TAX EXEMPTION ON NPS FOR THE SELF-EMPLOYED
NEW DELHI:Today
Till now, employees contributing to the National Pension System (NPS) were allowed to withdraw up to 40% of the total corpus without any tax at the time of maturity or closure of the account. The same benefit has now been extended to self-employed subscribers.
MUTUAL FUNDS TO PAY DIVIDEND DISTRIBUTION TAX
Mutual fund investors will now pay a 10% dividend distribution tax for income distributed by equity-oriented mutual funds. This will affect schemes that were distributing dividends as a matter of strategy.